Associated CU Pilots Subprime Rate Reward Loan
ATLANTA – Associated CU said yesterday it is offering an auto loan aimed at subprime borrowers that rewards members with reduced interest rates for timely payments.
The Rate Reward Auto Loan provides a full percentage point off loan rates after every 12 consecutive months of on-time payments, up to three percentage points for 36 months of timely payments. The credit union said its Rate Reward Auto Loan will allow applicants who have credit scores below 670 to achieve greater savings when they borrow.
If members purchased a 2008 vehicle for $26,000 and had a credit score putting them at an 8.99% APR for a 72-month term, their rate would be reduced one percentage point each year until the end of 36 months, putting them at a 5.99% APR for the remainder of the loan’s term. That could amount to savings of as much as $1,400 over the life of the loan.
Associated CU said it created the Rate Reward Auto Loan to make borrowing more attractive to members who have credit scores that cause their auto loans to be at higher interest rates. Rate Reward Auto Loans are available for new loans and members looking to refinance from other institutions.