HERSHEY, Penn.-Despite industry-wide numbers showing lending up at credit unions overall and auto playing a big role, a number of credit unions in this state say it is tough to make car loans this year-even with one priced at .99%.
Credit Union Journal spoke with several CEOs attending the Pennsylvania CU Association's annual meeting who cited competition coming from brutally tough manufacturer incentives, as well as from big banks and even large credit unions that want to gobble up share.
Many CUs have had to cut rate, often to no avail. Ed Williams, CEO at $132-million Discovery FCU in Wyomissing, said dropping to 2.5% for five years has not turned the key on auto loans. "We are finding some of the competition, banks and credit unions, as low 1.5% for five years. That is just too low for us."
At $71-million PALCO FCU in Muncy, CEO Tom Rachael said auto lending is slow this year because of the manufacturer incentive double-whammy. "The dealers are offering zero with a rebate. Used to be they offered one or the other, and we could get the member to take the rebate and come to the CU for financing."
Some Response, But...
Bob Knoffsinger, CEO at $45-million Titan FCU in State College, dropped his shop's rate to 1.5% for three years, which has started to get some response. Yet even the CEO wonders how much it really brings the credit union at this now razor-thin margin. "It is getting tougher all the time. We may consider dropping share rates."
One CU has slashed rates to 0.99% for three years on all credit scores and is seeing little improvement-but this time it is not due to the competition. Rosie Krantz, CEO at $300-million Lehigh Valley Educators CU in Allentown, said "this brings members in, but when they look at the payment they still feel it is steep. Members are paying more for cars now, and when you are focused on payment, as our members are, term is a big part of the equation."
