What’s New for New Car Loans in 2010
In 2010 the circumstances surrounding where to find the most attractive deals on new cars loan will not change drastically, but the way that you go about qualifying for those loans is expected to continue to change. It has long been true, that is, that the best deals on new car loans can be found at banks and credit unions. Those offered by companies affiliated with the auto industry – like the new car loans and financing options provided by the dealership where you intend to purchase your new car or truck loan – are typically the most expensive over the lifetime of the loan.
What’s new in 2010 is that the application process for getting any kind of consumer loan is more stringent, interest rates are heading higher, and lenders are struggling to come up with creative ways to charge more money to borrowers and pad their own profits. The exception to this trend is credit unions, so those who are savvy new car loan shoppers in this post-recessionary period will look for the best loans at a credit union, not a bank.
If you shop for your new car loan at your bank or another private lending institution, for example, you might wind up paying a slightly higher rate or more closing costs and other miscellaneous fees than you might pay if you went to a credit union. That’s because banks are essentially open for business in order to turn a profit for their shareholders, whereas the typically credit union operates more like a cooperative.
Because they are organized differently and have a different fundamental philosophy, credit unions tend to be more boring that banks. That’s a good thing, because while they don’t have the bells and whistles and fancy advertisements, they stick to a simple format of making money without making a killing off their members or giving their executives obscenely huge salary bonuses.
Credit unions also did not participate with the same enthusiasm that banks and mortgage lenders did, for example, when the financial industry fell for the allure of instant profits during the recent real estate and mortgage bull market. Those other lenders bought into the frenzy with no restraint and when the bubble burst they got burned and suffered terrific losses than left many of them bankrupt. But credit unions stuck to more conservative lending practices and came out of the ordeal relatively unscathed. Now they can still afford to offer new car loans with reasonable terms, while banks and other lenders are turning away customers or charging them higher costs. So if you are able to join a credit union you may get a slightly better deal or your new car loan in 2010.
Credit unions are usually organized around a particular group of people, like those who work for a specific company, members of worker or trade organizations, or government employees. They have a lower overhead because they generally have a smaller staff and offer fewer services than do major banks. They probably know most of their customers and many people who do business with a credit union say that the experience is more like working with a small town old-fashioned local bank. But at the same time, you may not find the location of a credit union so convenient, though, because they probably do not have a string of branch offices or offices and ATM machines in other cities. You may have to drive some distance to get to the local credit union, and the hours that it is open may be more restrictive than what you are accustomed to enjoying at a major nationwide bank.
But if you are serious about getting the best possible new car loan this year, a credit union may be the most intelligent option. Of course many people are under the impression that they can’t do business with a credit union because they do not work at a company that is affiliated with one and are not a member of a trade organization or other group that has its own credit union. You may be pleasantly surprised, however, to learn that the scope of credit unions have grown in recent years. There are credit unions for military veterans, for people who graduated from a particular college, and for various other designated groups. There are even many states in the USA, for instance, where being a resident of that particular place entitles you to join a credit union organized around state residency. So check around and see if you can join a credit union in 2010 in order to enjoy the benefit of getting a more attractive new car loan on terms that are more satisfying.
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