FLINT, Mich. – Just because most of the major auto manufacturers discontinued their zero percent auto financing promotions by year's end 2001 doesn't mean credit unions should stop educating members about the hidden costs and misinformation about these so-called deals.
"It may not be right away, but we'll probably see the dealers zero percent offers again in the spring or fall when they want to move inventory again to make room for 2003 models," said Security Federal Credit Union Operations Manager John Sayer.
That why SFCU is continuing to get the word out to members and to educate its staff to be able to present to members all the options and costs involved with dealers' zero percent financing promotions.
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SFCU is recommending its members who are in the market for a new vehicle to take three steps when they go to the dealer's site: select a vehicle they want even if it's not necessarily the vehicle the manufacturer is offering the financing on; take the cash incentive offered by the dealer instead of the discount, and apply the rebate to the purchase; tell the dealer the member wants to finance the purchase through Security FCU.
SFCU has had indirect lending relationships with about 60 area dealers for almost 11 years. While some of the dealers have lost financing opportunities to the credit union, Sayer said it's still a win-win-win arrangement "because we get the loan, the member gets a fair rate, and the dealer sells the vehicle."
He explained that, "The dealers don't say anything in their advertisements that tells the buyer that not everyone qualifies for zero percent financing. They don't tell you the buyer has to have an excellent credit rating, with no credit blemishes to be eligible.
"It's a rare occasion when a consumer qualifies for zero percent financing," Sayer said.
Sayer recounted the experience of one credit union member who was told by a dealer that they didn't qualify for zero percent financing and was offered a rate of 18% for a loan. When the member came to the credit union and explained the situation, SFCU was able to give the member a loan at 6 3/4% interest.
"We want our members to compare the deal they would get from the dealership to the loan we can offer them, look at the bottom line, including the cost of each additional option they take with the vehicle. Sure the deals are appealing, but we want them to ask themselves whether they can afford the zero percent financing loan the dealer is offering," said Sayer.
Security FCU has about 40,000 members. While the credit union counts about 60 select employee groups in its field-of-membership, employees of Buick and their families still account for the majority of SFCU's membership. Sayer said this isn't a problem for the credit union.
"Members are being turned away from the dealerships because they don't qualify for the zero percent financing. They have to go somewhere, and we want them to know the credit union is offering a better deal on a car loan," he said. – [email protected]
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