|Shopping for a new car at the dealership is often analogous to standing in line at the DMV or walking into a job interview, nerves in tow. This negative sentiment is usually the product of car buyers’ perception of pushy dealership salesmen and the terror of having to negotiate pricing and auto loan rates when financing a purchase.
There’s an innovative new relationship in the car dealer industry that’s picking up speed, however. More and more dealerships are actually assisting buyers by linking them with credit unions to help them access affordable auto financing terms and other financial benefits beyond the dealership lot.
A Convenient Auto Financing Partnership for All
A number of car dealerships are teaming up with local credit unions through partnerships like Credit Union Direct Lending (CUDL) and other independent, preferred-dealer programs. CU Direct, the creator of CUDL, reported that 1,072 credit unions were supported in 2013 through credit union-dealership programs, resulting in a year-over-year increase of 10 percent in successfully processed auto loan applications, totaling more than 2.8 million.
Whether car shoppers visit these preferred dealerships at their credit union’s recommendation or are introduced to credit unions because of this initiative, borrowers hopping aboard this collaboration have a number of benefits to look forward to.
Advantages of Preferred Credit Union-Auto Dealership Programs
“Our Preferred Dealer partnership is a win-win-win situation for the dealership, the borrower and our credit union,” said Sonya McDonald, vice president of planning and market development at RBFCU. “Members receive the convenience of closing their RBFCU auto loan at the dealership, making their vehicle purchase a one-stop shop… [it] is definitely a time-saver, as it provides our members with a turn-key lending and car-buying experience.”
A common piece of advice when shopping at a car dealership is to always come preapproved for an auto loan. With preferred dealership programs, buyers know that even if they didn’t get a chance to figure out how to finance their purchase beforehand, they’re still getting the best and most competitive deal.
2. Low Auto Loan Rates
Over the life of an auto loan, which has stretched to as much as six years, the interest can become a heavy financial burden on borrowers’ finances. Extra interest charges can drive up the total, out-the-door price of a new car purchase anywhere from hundreds of dollars to $6,000 and beyond.
Credit unions are nonprofit financial institutions that pride themselves on helping their members financially succeed. Members of these cooperatives are equal shareholders of the credit union, meaning their interests are put first, starting with affordable lending rates.
3. Fleet Pricing
City County Credit Union CEO Lloyd Gill explained another perk of doing business with a credit union-preferred dealer.
“If members buy a pre-owned car from our dealership, they can save hundreds of dollars,” Gill said, referring to the credit union’s AutoBranch. ”If they buy a new vehicle from a dealer we recommend, they are given ‘fleet’ prices.”
Fleet prices are typically offered to commercial businesses interested in purchasing vehicles in bulk at a reduced price. Usually, car dealerships have an exclusive fleet sales department who serve this specific clientele, but through credit union-dealer partnerships, like CCCU’s program, credit union members get an extra edge when it comes to saving money on a new car.
4. Other Car-Buying Perks
In addition to unbeatable loan rates and the possibility of reduced pricing, preferred dealership programs can offer other car-buyer benefits.
Gill told GOBankingRates that all used vehicles in CCCU’s independent dealership undergo a comprehensive service assessment before becoming available to buyers.
“Each vehicle is CARFAX history report-certified and has the CARFAX Clean Title History Guarantee,” Gill said. “The balance of factory warranties apply, if applicable.”
The primary goal that car hunters have when walking onto a dealership lot is locking in an affordable deal. But by working with a dealership who has a strong relationship with a credit union, borrowers are in for a deal that could pay off for a lifetime.
Renee Amato, VP/Chief Marketing Officer of LA Financial Credit Union, explained how the three-pronged connection between buyer, dealer and credit union works to ultimately benefit buyers the most.
“The borrower benefits because they are getting a great rate on their car and it is all handled quickly and efficiently at the dealership,” Amato said. “The buyer also becomes a member of the credit union and [receives] all of the benefits that come along with credit union membership.”
Low fees, superior deposit products and community-focused service are just a few of the long-term advantages that car buyers can drive away with through preferred dealership programs.