Michigan Credit Unions Boost Auto Loans

According to Automotive News, Michigan’s credit unions have been increasing at a surprising speed, and they think that a lot of it has to do with the fact that they are offering much lower rates than the banks that the dealerships traditionally use. They have found that the interest rate on a auto loan has been running 6.14% at the credit unions, and 7.35% at the banks.

They have found that the percentage of people using the credit union auto loans has increased over the past two years from 3% to 10%. The Michigan Credit Union League President David Adams says that the jump is due to two things: the aforementioned interest rate that they charge, and the selling off of loans and how they affect them.

Because of the way captive lenders have been sold off, it has led to better working relationships between lenders like credit unions. They usually have a vested interest, which has a lot to do with the larger influx of car loans coming their way.

The biggest thing however is the speed at which the credit unions have been processing their loans. It is in the dealers best interest to get a loan processed as soon as possible, so that they don’t lose the deal. If a lender starts taking too long to approve a car loan, customers have a chance to think about what they are doing and many times they will simply walk away from the deal so that they can think about it some more.

With credit unions processing them so fast, it has made them a major competitor with the larger banks who used to be known for the number of loans that they would process and how quickly they could do them.

Back to March Index