Hank Hubbard, CEO of Communicating Arts Credit Union in Detroit, Michigan ($34 million) says that he’s seen too many consumers fall victim to exorbitant auto loan financing far too often.
When Linda Wasson began to recover from a bankruptcy bruising she found a vehicle at a local dealership, but was strong-armed by the dealer into a high rate loan.
"I went in to the dealership just to look at a car and I was at that dealership about six hours," she told The Marketplace.com. "They were determined to get me this car." The dealer’s persistence landed Wasson in a $20,000 2010 Hyundai Sonata with a five year loan bearing a 21.2% rate.
The dealer told Wasson it was the best deal she could possibly get, so she reluctantly took the offer and made consistent on-time payments until she finally connected with Communicating Arts Credit Union.
The credit union helped Wasson refinance her 21.2% rate to 4.25%. "My car payment went from $660 a month to $483 a month, which, to me, is a big savings,” she said.
If Wasson had waited and talked to her credit union before signing with the dealership she could have saved even more money over time.
"There are an awful lot of people that are paying the maximum rate that’s allowed in Michigan, which is 25%,” Hubbard told The Marketplace.
"I was going to end up paying, like, $40,000 for a 2010 Hyundai Sonata and that was just ridiculous," Wasson said.
6 Ways You’ll Save Money with a Credit Union
Stories like Wasson’s are quite common, especially during a time when auto sales are booming. J.D. Power and Associates and LMC Automotive estimate that auto sales in January 2013 alone have increased by 8%.
With more consumers heading to the showroom, how can they save money on their auto loan once the vehicle price has been negotiated?
Credit Union Direct Lending spokesman, Bill Meyer told Bankrate.com that visiting a credit union for vehicle financing is many consumer’s best option:
- Credit unions have money to lend. Meyer explains that credit unions made $80 billion available during the height of the financial crisis in 2009, during a time when credit had dried up. Credit unions are one of the healthiest places to seek funding.
- Credit unions aren’t looking to make money off your loan. Because credit unions are member owned, you are more likely to find a loan associated with lower fees and rates. Credit unions are also more likely to work with the borrower if they have trouble making payments than a bank, Meyer adds.
- More consumers can join a credit union. In the past credit union membership was only open to those who were employed by a certain company, part of a specific industry or group. Today community charters and a wider variety of membership opportunities make it easy to join a credit union.
- Local decision making and sophisticated technology provide for a quicker turnaround. With in-house online and phone loan applications, the approval process is delivered in a swift and efficient fashion at a credit union.
- Credit unions have special auto loan promotions and deals. For example, Enterprise Car Sales are held at credit unions throughout the country where members have the opportunity to snag a great deal on a pre-owned car.
“Partnerships between Enterprise Car Sales and credit unions are successful because we have a lot in common, including an unprecedented level of member service, along with a commitment to their local communities,” said Mark McAndrews, assistant vice president of Enterprise Car Sales in a press release. “For more than 30 years, our relationships with credit unions have continued to grow stronger and more productive. We’ve shared the most success when credit unions consider us a part of their overall auto strategy.”
If you are ready for some new wheels, find a credit union and inquire about rates and offers.