Credit Unions: Consistent Source of Car Loans in Tough Economy

Although economists may not agree on whether America is or is not in a recession, it is clear that not all lending institutions have been able to respond to the needs of car dealers seeking financing for their customers. When banks were backing away from the lending of money, credit unions held their own and remain good places to obtain vehicle financing.

Some of the more aggressive banks are now coming back and are out to reclaim their market share of the lending “turf” by increasing marketing efforts to lure credit union members and auto dealerships over to their side once again.

Some of the larger, more competitive banks have started introducing extremely attractive loan rates that are hard to beat. However, the article reported that a credit union in Indiana relayed that auto dealerships in their area expressed appreciation for the efforts of the credit union in recent years. Dean Pielemeier, the chief lending officer, explained that one dealership owner personally expressed his appreciation that credit unions had “been around in good times and don’t bail in the bad times.”

Car Dealers Desperate in Tough Economic Times
Americans witnessed history last year when two of the big three automakers were in deep financial trouble. As the credit freeze took hold of the banks, some car dealers had little choice but to handle auto financing on their own without the help of the auto makers or the lenders. As a result, auto loans were easier to obtain due to the creativity and desperation of the dealerships simply trying to move their inventory. Many credit unions were truly appreciated in such an environment.

Credit Unions Hanging Tough in Tough Economic Times
While it is true that many lenders were adversely affected by the credit freeze that swept across the nation at the end of 2008, many credit unions were not as exposed to the toxic mortgage assets as banks had been, and continued lending money to borrowers needing vehicles.

In an article from the Credit Union Journal in mid-2009, Chris Cottle, a vice president of marketing at a larger credit union, stated that: “Looking at the market landscape right now, there is a tremendous opportunity for credit unions to strengthen their core value proposition and get new customers by pointing out the unique difference in the way they’ve serviced their members over the past several years.”

Many credit unions capitalized on the economic crisis and filled a genuine need. However, now that banks are muscling in on the action, it can mean that even better deals may start to appear for potential car buyers.