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Michigan CU loan business fueled by autos
LANSING, Mich. (9/11/09)--Michigan credit unions experienced growth in the auto-lending market with an 8.5% increase in new loans in the second quarter, which equates to $2.2 billion in auto-loan balances as of June 30, according to the Michigan Credit Union League (MCUL). This represents a record 32% increase in new-vehicle loans from June 2008 to June 2009. The growth coincides with the launch of the “Invest in America” program in December, which offers credit union members discounts on select General Motors (GM) and Chrysler products, and low-cost financing. The “Invest in America” member discounts are helping the domestic automakers during a critical time when credit is tight. It’s also helping to promote “buy American” which is on the minds of most Americans right now, MCUL said. “More than 200 credit unions statewide have stepped in to fill the void in auto lending,” said David Adams, MCUL CEO. “Credit unions are financially stable, increasing members’ savings deposits, and supporting their members and Michigan’s auto companies by making the loans that put new and used cars on the road. “The ‘Invest in America’ program has strengthened credit union relationships with auto dealers and shown the importance of buying American,” he added. “This is not just about market share; it’s about credit unions helping the auto industry, jobs and our economy.” “Invest in America” has facilitated more than 190,000 new-vehicle purchases for GM and Chrysler nationwide since January. The program has resonated with Michigan car buyers as the Detroit automakers work to reestablish market share, the league said. By offering a discount on a new GM or Chrysler vehicle, the program encourages Michigan’s 4.4 million credit union members to buy American-made products and support local jobs. By offering lower rates than competing lenders, the program prompts members to finance their purchase through their credit union. The average new-car loan rate from a credit union is lower--at 5.8%--than bank rates at 7%, according to Datatrac July 2009 data. Used-car loans increased 14% from June 2008 to June 2009, and small-business loans grew 17% over the same time period. The momentum continued into the third quarter of 2009, as Michigan credit unions increased their market share of new- and used-car loans to 36% on July 31 from 23% on July 31, 2008. This is the highest market-share increase of the 20 most populous states, the league said. Reflecting the trend in the broader economy, credit union savings deposits grew by 2.5% in the second quarter. This represents the strongest growth rate in six years. Overall credit union loans also are on the rise with an increase of 1.6% in the second quarter. This represents a 12-month growth rate of 5.8%--the highest since 2005.
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