Texas Credit Unions Seek Auto Loans by Arranging Sales at Wholesale Prices; Trade Group Starts Program to Combat Low Rates of Carmakers' Financing Arms
LaGesse, David, American Banker
Texas Credit Unions Seek Auto Loans By Arranging Sales at Wholesale Prices
DALLAS -- Eager to recapture auto loans lost to dealer financing programs, Texas credit unions are going into the new car business by offering cars at wholesale prices -- if the buyer gets a loan at the local credit union.
"Detroit got into the financing business. We need to make auto loans, so we're going to be selling cars," said Richard E. Williamson, a spokesman for the Texas Credit Union League.
The Dallas-based trade association has arranged with a Dallas car broker to provide the cars at or below wholesale prices for Texas credit union members. League representatives presented the plan at recent seminars held around the state.
"The sign-ups are coming hot and heavy," Mr. Richardson said of the response of credit union executives.
Credit union members can call a toll-free number to a get a price quote on the car they want to buy, and they can use that quote as they shop local dealers. If the dealer can match the wholesale price on the car and also beat the credit union's financing rates, "then they're getting a good deal," said Mr. Williamson.
One way or the other, the program should make the pricing of new autos more competitive, said William Hamilton, senior vice president at the Texas Credit Union League. The wholesale prices offered through the Dallas broker, New Concept Auto Resources, can save the buyer up to $800 on midsize American cars, he added.
New Concept is tied to a network of 400 auto dealers that sell domestic and foreign cars around the state, and more dealers are calling the credit union league to sign up, said Mr. Williamson.
The league also has introduced two other programs for its members to generate more auto loans. Those include a loan program with a balloon payment at the end that mimics the economies of leasing cars, and a preapproved loan program for car shoppers.
But the dealer arrangement appears to be the most innovative and is a more aggressive version of others tried by individual credit unions around the nation to combat dealer financing incentives, said Howard Cosgrove, a spokesperson for the Credit Union National Association, Madison, Wis.
A few credit unions made similar arrangements with local brokers to provide referrals on buying autos at wholesale prices, but Mr. Cosgrove knew of none that required the buyer to get financing through the credit union.
"If the credit union can get the buyer to work with a broker, then at least the consumer isn't subject to point-of-sale pressure from a dealer to take dealer financing," said Mr. …