The recent auto recalls by Toyota Motors has led Aspire Federal Credit Union in Clark, N.J., to reach out to members with a unique offer.
The credit union is offering members the option to trade in their recalled Toyota for a different vehicle and borrow the same amount as their original loan, plus up to $5,000 more if they are upside down on their loans. The term of the new loan is also extended by the credit union so members will have the same monthly payment amount as the original loan. The rate on the loan also remains the same for the member. The credit union determines rate by individual creditworthiness. The average rate on a used auto loan at Aspire is 8.47% and 6.94% for a new auto loan. The lowest base rate for a used auto loan available is 4.79% and 3.99% for a new auto loan.
According to the credit union, 200 members financed a Toyota vehicle at the CU, and approximately 60 of those members had vehicles on the recall list.
"The safety and well being of our members, financial and otherwise, is our primary concern," said CEO/President Thomas J. O'Shea. "The primary goal of this offer is to give members the option of getting out of a vehicle that is potentially dangerous and into a different car as quickly as possible, while making the transition easy for the member."
The credit union mailed letters to members that are eligible for the offer on Feb. 12, and so far one member has taken the credit union up on the offer to trade in his Toyota Corolla for another vehicle. Laura-Ilene Harding, vice president, marketing and business development at Aspire, said that the credit union will be making follow-up phone calls to eligible members and will address any questions or concerns.
So far, Harding said the credit union has not received any feedback from Toyota or any local Toyota dealerships, but one member did say that a dealership had asked for a copy of the letter the credit union mailed out.
Including a $5,000 extension on the loan for members that are upside down is an additional risk to the credit union, Harding said, but the risk is worth the peace of mind it will give members should they decide to take advantage of the offer.
"Since many people buy cars with no money down, the likelihood that they will be upside down in their existing loan is a good possibility. If they originally planned to keep their vehicle for an extended period of time, which is often the case, they would not have worried about that ahead of time. We wanted to be sure that members would have the ability to trade in their existing vehicle for another one, if they chose to do so, and this was one way to ensure that could happen," she added.