Having Low Rates No Longer Enough
HAUPPAUGE, N.Y.-GrooveCar President David Jacobson has noticed credit unions getting much more aggressive on A-plus paper, a change from a year ago when competition for top-tier credit drove many CUs away from that market.
"It's somewhat surprising, but the lowest rate in our market is from a credit union (Teachers FCU 1.99%). Yet even a rock-bottom rate may not be the answer for credit unions since banks allow dealers to mark up the rate and pay a higher flat fee. The banks are giving dealers the opportunity to make more money, so we start off handicapped."
Jacobson noted that car sales in upstate New York have not taken off with the rise in auto sales, attributing a lot of that to bad weather. Mike Chapman, SVP of lending for the $6.2-billion Security Service FCU, San Antonio, believes the weather may be playing a role in suppressing loan volume. "You are seeing increases in car sales, but not in every area of the U.S.," said Chapman, who shared that SSFCU is charging from 3.50% to 4% for 72 months across its markets. "I think the indicator of the kind of year we will have will come in March and April. We will know by the end of April how all this is going."