Credit Unions – An Underappreciated Source for Auto Financing

Personal Finance

Finding and buying a car is rarely an enjoyable event. The amount of potential resources can be overwhelming, from used or new dealerships to banks and private sellers. Hours and days are spent searching online and off for the right deal. But that hasn’t stopped people from car shopping. Sales for most major automakers were strong in May, and Experian Automotive noted increased auto financing in the first quarter of 2013, especially on extended loans (payment terms of 73 – 84 months).

Reduce Your Stress at a Credit Union

If you’re looking to buy a new or used car, you should look to your local credit union. More and more consumers are using credit unions as their source for auto financing. Experian reported that credit unions had a 16.7% share of the auto loan market in the first quarter of 2013, up 0.04% from the previous year. Many credit unions offer their members interest rates below the national average and flexible payment terms,. Some of them partner with dealerships or have in-house auto sales to facilitate the car-buying process, too.

Credit Union Specials

Even more exciting are the special auto loan deals that credit unions promote throughout the year that appeal to every kind of consumer. Whether you drive a muscle car or a Prius, or even if you don’t have the best credit history, credit unions have a deal to fit your automotive lifestyle.

Here are a few creative summer auto loan deals being offered at credit unions around the country:

For the classic car fan, Star One Credit Union offers Classic Used Car Loans that finance up to 80% of the purchase price. The loans have a 5-year maximum term and fixed interest rate. Star One also has a Car Loan Modification program that allows members to lower the interest rate on their current auto loan with the credit union. Members have the choice of maintaining monthly payment amounts or lowering them along with the rate.

For the green driver, SEFCU provides the Green Vehicle Discount. You could get a 0.25% rate reduction on your loan if you have a car that is classified as SmartWay Elite in the EPA’s green vehicle guide. SEFCU also makes it easy for members, particularly those ages 18 or older, to establish credit with their First-Time Borrower loan. Young adults can get the financing they need to buy their first car and put themselves on the road to good credit.

For the driver looking to improve their credit score, Associated Credit Union has the Rate Reward Auto Loan. If you have a credit score of 670 or lower, your auto loan interest rate could be reduced up to 3% when you make your payments on time. Your rate will decrease by 1% for every 12-month period of timely payments (up to 36 months). “Associated Credit Union has plenty of money to lend and wants to help members who had good credit but have been negatively affected by this economic crisis,” says Associated CU’s President and CEO, Lin Hodges. “By helping our members get a loan and save money when they borrow, we’re not only reducing their interest rate when they make timely payments, we’re also helping them establish a good credit history so they can immediately qualify for better interest rates in the future.”

For the driver who likes a little extra cash in their pocket, Logix has a $50 Auto Referral Bonus. You and your friend will get $50 (and a chance to win a 2013 Camaro) if you both open an auto loan account at Logix. While the bonus is nice, Logix also offers low fixed rates on their loans, up to 125% financing, extended terms up to 84 months, and for qualifying members, a 90-day payment break.

For the more cost-effective driver, Anheuser-Busch Employee’s Credit Union has the Advantage Over Lease Loan. Whether you are buying or leasing a car, you only pay for the decrease in value of your car over time. You don’t have to provide a security deposit, and there is no acquisition fee or pre-payment penalty. When the loan term ends, you have the option to refinance and keep the car, sell it, put the value towards a new car, or give your car to the credit union. “We strive to design unique products to serve the varying needs of our members,” says Pier Alsup, SVP Marketing & Communications. “Our Advantage Over Lease Loan has been strongly embraced by members looking for both an economical and attainable way to get into a new car.”

Image: David Hilowitz/Flickr source