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CUs compete with dealers on auto financing
BAKERSFIELD, Calif. (4/20/10)--Credit unions “must go toe-to-toe with automobile manufacturers hungry for customers” when offering auto loans to credit union members, according to a California newspaper. However, credit unions can emphasize their member service advantage. The Bakersfield Californian reported Friday that competition is tough for auto financing between credit unions and auto manufacturers. Auto manufacturers can offer financing at 0% interest because they can make money in other ways--while credit unions cannot. It’s hard to compete with zero percent interest, said Doug Kileen, president/CEO of Safe 1 CU, Bakersfield. Steve Renock, president/CEO of Kern Schools FCU, said his credit union hasn’t changed its strategies in auto financing but recognized that there is more competition from manufacturers’ captive finance companies. While competition may be tight, credit unions have an advantage over manufacturers. Credit unions can respond to their members’ needs--like extend the term of a loan beyond what manufacturers offer, said Linda Crosby, senior vice president of financial services at Kern FCU, Bakersfield. Credit unions need to speak out about the potential drawbacks of manufacturers’ low interest deals--which can mean shorter loan terms and bigger monthly payments, added Bill Meyer, communicators for CUDL, an Ontario, Calif.-based indirect auto lender for credit unions. The deals offered by captive finance companies also may only be available to those with good credit, Meyer added.
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