Credit Unions Getting More Involved in Auto Loan Market

Credit unions are starting to really get their foot in the auto loan market, as more and more auto dealerships are touting their worth. Many dealerships will make deals for credit unions to finance their car sales because they find they have more educated buyers as well as people who have an actual relationship with their bank.

Credit unions increased their share of the auto loan market from 3% to 10% over the last two years. Car loans have always been the mainstay of the credit union business, but they have never seen the amounts that they are seeing now. In 2005 alone, they brought in roughly $42.5 billion in car loans.

They think part of it is probably that the price of their loans is lower than most. If you are getting a new car loan at a regular bank, you are looking at 7.35% over the life of a 48 month loan. At the credit union, you are looking at 6.14% which is more than a percentage point less than what the banks are offering.

But it isn’t just the new car loans that they are being competitive on; it is used car loans as well. You are finding 6.44% at the credit unions and 7.69% at the banks for a used car loan. In this day and age, people need that extra money to spend at the gas tank, not in interest.

But the credit unions are also doing better at having a real presence at the dealerships, and a lot of that has to do with the fact that they pay so quickly. The dealerships want money in hand, and the credit unions have been able to do that for less.

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