Plus, NCUA caps credit union interest rates at 18% while other lenders have no maximum
Media Contact: Barbara Fornasiero; EAFocus Communications; firstname.lastname@example.org; 248.260.8466
Wyandotte, Mich. — January 27, 2023 — With the average price of a car in the United States hovering around a record-setting high of $48,500, the cost of a new set of wheels is enough to send car shoppers reeling. That’s why the interest rate on auto loans is of critical importance to anyone seeking options to offset the staggering monthly payment. Carma Peters, president and CEO of Michigan Legacy Credit Union, says borrowers at all socio-economic levels are turning to credit unions for low-interest auto loans.
“No one wants to pay more than they have to when financing a new automobile,” Peters said. “Credit unions are designed to serve members first, not shareholders. Combine that with the profit motive of banks versus the nonprofit status of credit unions, and it’s easy to understand why consumers are looking to credit unions for lower interest auto loans. In most cases, credit union interest rates are not just lower than banks, but auto dealers as well. Plus, you can avoid unnecessary fees when purchasing your new car or truck.”
Peters adds that those with poor credit or no credit should also seek out a credit union to establish a better credit profile and get on stronger financial footing. When it comes time to purchase a vehicle, they will benefit by obtaining the lowest auto interest rates possible, due to regulations from the National Credit Union Association (NCUA).
“Interest on auto loans for those with shaky credit can go as high as 28% from unregulated lenders, but the NCUA caps credit union auto loans at 18%,” Peters said. “That 10% increase in interest over the life of a five-year car loan of $25,000 can mean paying $7,570 more for the car. Why would someone pay that much if they didn’t have to?”
Regardless of creditworthiness, obtaining a loan from a credit union is even easier when a pre-existing relationship exists, according to Peters.
“Credit unions have more flexibility in granting loans and setting loan terms,” Peters said. “They can review recent history to determine the likelihood the member can make the monthly payment and fulfill the terms of the loan – and set the interest rate accordingly. Unlike banks, there is no set formula or algorithm that solely determines the credit worthiness of the borrower. Credit unions consider a variety of factors and have greater discretion to approve a loan.”
About Michigan Legacy Credit Union
Michigan Legacy Credit Union (MLCU) is a member-owned, not-for-profit financial cooperative serving members who live, work, worship, attend school, or own a business in the state of Michigan. Michigan Legacy Credit Union is committed to providing quality financial services at a competitive price, delivered professionally and efficiently while keeping member/owners and their needs first. For additional information on MLCU, visit: www.michiganlegacycu.org.