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You Could Save Thousands with a Credit Union Auto Loan Article Photo

You Could Save Thousands with a Credit Union Auto Loan

Credit union auto loans are off the charts as a growing number of members clamor to local credit unions for a better deal.

Automotive consultants at LMC Automotive and J.D. Power reported an overall 1.248 million increase in new vehicles, following a 17.5 million annualized rate in August.

"The strength in automotive sales is undeniable, as August sales performance was well above expectations and there is no evidence of a payback in September, suggesting that the auto recovery still has some legs," LMC forecaster Jeff Schuster told Reuters news source.

LMC prognosticated that 2015 U.S. vehicle sales will reach 16.7 million vehicles and the group had already boosted its 2014 full-year forecast from 16.3 million to 16.4 million vehicles.

Credit unions throughout the country are already seeing a big piece of this increase. For example, New York credit unions report a 4.9% upsurge in new and 4.4% boost in used auto loans.

In Iowa, credit union auto loan penetration increased 1.6 basis points to reach 24.4% in June, which is far beyond the 17.0% average.

First quarter numbers in California pointed to the emerging trend early on, as the California Credit Union League reported that new and used vehicle loan balances grew by 5.8% and 2.9%, respectively.

Credit Unions Are Easier to Use than You Think

While its no secret that credit union auto loans are a great deal, people who are not familiar with the industry may think that getting an auto loan is a arduous process.

While many members head to a credit union branch for an auto loan, a growing number of credit unions are working directly with local dealerships to make the process even easier. For example, in 2013 Northeast Credit Union ($986 million, Portsmouth, NH) managed to dominate 8.4% of the auto loan market share thanks to dealer relationships.

According to local auto dealers, the relationship is a welcome one. "They're good people without being pretentious," said Cheikh Dieng, business manager at Allen Mello Chrysler-Jeep-Dodge of Northeast Credit Union. "They help us. We help them back."

Northwest Credit Union is one of 1,100 credit unions part of a nationwide online indirect network called Credit Union Direct Lending (CUDL).

According to Thomas Weaver, chief lending officer at Northeast Credit Union, the credit union-to-dealer relationship is efficient and effective. "We have a consistent relationship," he told Automotive News. "It arrives from fast decisions, consistent decisions, fast funding and flexibility."

Plus, having a credit union on-site dealer option provides the dealer with more ways to help the customer close the deal. Darrell Alberico, business manager at Benson Auto said that Northwest Credit Union has managed to land approximately 50% to 60% of his company’s loans.

"They kind of act like a larger captive," Alberico said. "They buy good paper and they make smart deals." He adds, "They do everything right, and their funding is great.”

Hard-to-Beat Refinancing Deals

Have you already financed your vehicle? No problem--credit unions often run promotional auto rate specials that can take your current payments down to a considerably low amount.

For Doug and Alleen Flora of Sioux Falls, South Dakota, learning about their local credit union’s auto loan rate special saved them a bundle of money. Sioux Empire Federal Credit Union (Sioux Falls, SD) ran a “first-come, first serve basis” auto loan sale, offering a .99% rate to the first people who applied online. Car loan rates only rose up to 2.25%.

Alayna Johnson of Sioux Empire Federal Credit Union told a local television station that all of the credit union’s auto loan rates can offer a substantial savings. "With the best rate we have today, it's 2.49 percent--so it's quite a savings," she said. "People are out there and ready to buy; things are maybe changing on that side of it and then the rates. The rates are good. It's cheap money."

Credit union loans are also making everyone’s lifestyle more affordable. "I'm saving a whole bunch of money and the truck is going to be mine at the end of the term," Doug Flora told KELOLAND TV. That “bunch of money” equated to approximately $5,000 when the Floras refinanced through the credit union.

By Gina Ragusa
Published October 6, 2014
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