No-Payment Auto Offer Gets Lukewarm Response At Sale
Despite low response to a deferred payment promotion at previous events, credit unions in Long Island are giving it one more try during a car sale.
Joanne Steigerwald, VP of operations at People's Alliance FCU in Hauppauge, N.Y., said her credit union and several others on Long Island introduced the promotion that included no payments for six months as part of a vehicle sale hosted by GrooveCar automotive resource and buying service in January 2003.
Steigerwald said representatives of about 10 CUs on Long Island belonging to the GrooveCar coalition came up with the idea during a quarterly meeting to discuss ways to draw in buyers and help members with financing during GrooveCar's semi-annual events for CU members.
But, as it turned out, Steigerwald said, members weren't much interested in the program.
"The sale itself is always good," Steigerwald said. "But in July, we had only two members sign up for the deferred payment plan. In January, there was one."
She said most opted instead for another plan -also introduced last year-that allowed them to spread payments over seven years.
"With that program, I think, the payments are low enough and the (members) are happy with it," she said, adding that like most consumers, PAFCU's members shop for monthly payments rather than overall price.
Still, she said, the deferred payment program is a good enough deal to give members another shot at it. "We offer the membership a chance to make no payment for six months when they purchase a car," she said. "The interest is accumulating during that time, but we have daily interest with our loans so their first payment would go to interest."
She said there are no prepayment penalties and depending on credit rating and the financing method, members can get an interest rate as low as 3.49%.
In addition the deferred payment and the seven-year plan, GrooveCar will launch a new balloon loan product for CU members only called BuyRite Plus or BRP.
It combines a regular auto loan with the features of a lease. For example, monthly payments are lower, no down payment is required and there are no mileage limitations.
At the end of the loan term, the buyer can sell the car and pay loan balance, trade the car in and pay loan balance or keep car and refinance the debt.
"The relationship with GrooveCar and the credit union members has been great for all parties involved," said Wayne Siegel, President of Legend Nissan in Syosset. "We're looking forward to kicking the year off strong with the CU Auto Sale."