Credit unions are stepping up to help consumers with discount programs and pledging money for auto loans.
If bridge loans are the lifeline for auto makers, consumer confidence and credit availability are just that for dealerships.
Nearly 2,000 credit unions first joined with General Motors Corp. to offer $10 billion in available car loan funds, to go along with a “supplier discount” equating to 5% of the suggested retail for vehicles.
Meanwhile, a group of credit unions in the Midwest and South expanded the discount program to lure potential car buyers for models made by Chrysler LLC.
The credit unions are now offering their 14 million members in 12 states rebates of $500-$1,000 on eligible Chrysler, Jeep and Dodge vehicles. In addition, they are pledging another $12 billion in auto loans.
“We've seen some heightened activity with credit union auto lending, specifically because of what's been going on with the auto leasing area — lenders kind of backing away from that — and then with subprime mess we had earlier in the year,” says Bill Meyer, a spokesman for Credit Union Direct Lending.
In 2008 GMAC Financial Services and Chrysler Financial dramatically curtailed their leasing options.
Meyer says those factors have “definitely given credit unions the opportunity to present themselves as an alternative financing option for dealers.”
Experian data shows that last January credit union auto lending market share was at 15.8%. It hit 21.6% in October.
“There's been a significant swing for credit unions as far as their presence in the auto lending marketplace,” Meyer says.