A number of factors are involved in putting together a successful auto loan. At Credit Union Acceptance Company (CUAC), we specialize in providing support for indirect auto lending arrangements for the credit unions we serve. Understanding the elements of the auto loans you offer can help you provide the most practical assistance to your members in the competitive lending environment. Borrowers should consider a few important points when taking on a new auto loan.

Understanding the Basics of Auto Loans

Both direct and indirect lending arrangements typically have the same basic structure. The differences typically involve the exact terms of the following components:

• The down payment, if any
• The length of the loan term
• The interest rate paid over the duration of the loan
• The ability to defer payments
• Fees charged for early payments

Credit unions can often provide lower interest rates to their members and may not require a large down payment to approve the loan. The fees and charges associated with auto loans may also be much lower because of the membership status of the borrower.

Hidden Costs of Auto Loans

In some cases, auto dealerships may offer lower quotes on vehicles for customers who accept financing from the lending company affiliated with their dealership. Those who opt for an outside lender, by contrast, may end up paying more for the car, truck or SUV of their choice. Credit union indirect lending arrangements may also offer these benefits for their members, making it easy for these customers to combine the best prices with the most favorable loan terms when purchasing a new or used vehicle.

Providing the Right Guidance for Indirect Lending Customers

As a credit union, you have a real opportunity to educate your members about the right steps to take when planning to take on an auto loan. Two of the most important elements to emphasize during these educational efforts include the following:

• Working to improve credit scores and to pay down debt can often allow borrowers to access lower interest rates when purchasing a vehicle. Your credit union can provide guidelines on the most appropriate credit ratings to achieve lower interest rates and better terms for your members.
• Making sure that all shopping activities and applications for auto credit take place within a 14-day period can help your members avoid repeated hits for hard inquiries on their credit report.

At CUAC, we offer essential support for credit unions in setting up indirect auto lending arrangements with dealerships and in managing these activities successfully. Give us a call today at 1-866-970-2822 to discuss your indirect auto lending requirements with our team. We look forward to the chance to work with you.