There are several reasons why you should choose credit union lending over dealer financing.
- Ancillary products such as GAP insurance and extended warranty options.
GAP (Guaranteed Asset Protection) Insurance protects you from financial loss in the event your vehicle is totaled or stolen. GAP pays the difference between the loan balance and what your insurance company will cover, which is usually low blue book. Credit unions offer GAP insurance at low rates, some start as low as $295. Dealers, on the other hand, can charge anywhere upwards of $500.
Extended warranty options, also known as MBI or Mechanical Breakdown Insurance, are insurance policies that insure your new or used vehicle against mechanical failure. With MBI policies, you can usually choose any mechanic in the U.S. to service your vehicle. MBI varies greatly depending on coverage desired, model, and age of the vehicle. On average, credit unions can offer policies as low as $800 compared to the average dealers cost, which can range between $1500 to $3500.
By choosing to finance through your local credit union, you’ll save when you purchase their insurance products versus purchasing the same policies with a dealer.
- Better Rates
Credit unions usually offer better rates than dealer financing, especially for members with A+ credit. In addition, most credit unions offer rate discounts, especially relationship-type discounts. For example, the more services you have on your account (payroll direct deposit, other loans, savings and checking accounts, etc), you’ll be offered a loyalty discount. Most credit unions have gone green and offer hybrid rate discounts.
Credit unions also approve based on more than your FICO score by considering your relationship with them, your credit history, debt-to-income ratio, your employment history, etc.
- Open-ended lending
Most credit unions offer open-ended lending, wherein you’re able to change the payment of the loan. This would happen if you were to make a lump sum payment towards the principal. Or you can add an aftermarket product to the amount financed after you’ve purchased the car, as long as the amount financed is within the credit union’s lending guidelines.
- Better member service
After you’ve financed your vehicle, you can trust that your credit union will provide you with the best member service. In addition, you won’t have to worry about your loan being sold to another or several other financial institutions.
For more questions about credit unions, click on the links below:
For questions about what your credit union offers, contact them directly or call us at 1-800-359-4567 or visit us online at www.autoexpertonline.com.