As the country pulls out of a recession, many individuals are more prepared than before to purchase a new car. These car buyers may have been waiting for a better personal financial situation. Others may have struggled on with their dying vehicles, only to find that their now inoperable vehicle has forced them into a new car purchase now. Still other consumers are simply aware of the new possibilities for funding car purchases and want to take advantage of those developments. One exciting option for those who want to buy a car is the credit union lending network.
New Lending Opportunities for Credit Unions
Credit unions have naturally been cautious about providing loans, especially to high risk consumers. However, emerging technology has made it safer and easier for credit unions to offer loans. Creditunionmagazine.com talks about this in an article about new auto loans coming from credit unions. As consumers who have been struggling financially look for non-prime and sub-prime loans, they will turn to lenders that they wouldn’t have considered before. Credit unions with the ability to provide the auto loans can attract consumers who would otherwise turn to less reputable or trustworthy lenders.
How Lending Networks Help Credit Unions
What are lending networks and how do they help? The networks are created by a third party with access to a number of reliable lenders. Credit unions put together the details of a lending plan that would work for them, including:
- An appropriate credit score range
- Acceptable collateral options
- Monthly finance amounts
- The number of loans they would like to make
- Rates they would like to offer their borrowers
With this plan, the network company will search for those borrowers that fit within that plan. The credit union retains the ability to approve or refuse the loans. The credit union lending network pays for the marketing efforts and receives a percentage of those loans that are financed through them.
How Lending Networks Benefit Car Buyers
How are lending networks helping car buyers? For many car buyers who have already been turned down by banks and other financial institutions, credit union loans represent a much safer alternative than loans through unsavory lenders with high interest rates and questionable terms. The ability to work with a credit union, whether local or not, means that those car buyers have access to better repayment terms, lower interest rates, and the security of working through a reliable financial institution.
Emerging Technology Unites Credit Unions and Lending Networks
As the economic environment fluctuates, larger banks and financial institutions will continue to entice new car buyers with competitive rates and loan bonuses. Car buyers who don’t qualify for the terms set forth by banks may find that indirect lending through lending networks and credit unions is a viable and beneficial option. The used car loan niche is becoming very technologically advanced and this means that credit unions, once tied to geographic areas, can now expand their loan market beyond their communities, beyond professional groups, and beyond the confines of their own financial holdings.
Online resources are bringing credit unions and car buyers together to the benefit of both parties. Lending networks may represent the future of loans, especially as car buyers become more discriminating in auto loans and credit unions feel more comfortable about offering those loans.