Why a Preapproved Car Loan is More Important than Ever

Car salesman’s wardrobes may have improved, but unfortunately the industry still has some sleazy practices.  Just last year my husband and I were shopping a Denver metro Toyota dealer. Normally I would avoid stereotyping anyone, but since this guy hit me first with his preconceived ideas, I’ll punch back. First he wore way too much cologne, then he used just about every canned line on me. Next he assumed that I was looking for a car that was comfortable vs. one that I wouldn’t have to floor just to get on the highway.  The final straw came in the finance discussion. My husband rolled his eyes and mumbled to me how he hated the “talk to my manager” routine. Then when he pulled out a pre-printed sheet of four square, we walked out. Yes, the old games are still alive in the world of car sales.

For some years credit union members have felt that they were protected from car financing tactics. That was because many credit unions, including Coors Credit Union, participated in a program that enabled members to get low credit union vehicle financing at the dealer. The purpose behind this program known as CU Direct Lending, was to help out members who hadn’t thought too much about financing before they began car shopping.

It was a great program, but sadly it didn’t always benefit members. Financing is where car dealerships make their money.  Dealers soon found ways to get around low rate credit union loans. One way was to pad the sale with after-market extras and extended warranties. Another was to tell the buyer they didn’t qualify for the lower rate. Commonly dealers would ask the buyer “what amount would be a comfortable monthly payment”, then they stretch the loan time period to fit that amount. The result would be a longer term loan with a higher interest rate. The bottom line: credit union members were not getting credit union rates at the dealer.

So after careful review of the indirect lending program, Coors Credit Union concluded that this program was not in the members’ best interests.

So how do you ensure that you get low-rate credit union financing? The smartest way to buy a car with an affordable loan is to come to the credit union for a preapproved auto loan. Similar to what you would do when buying a home, preapproval gives you a good rate on an honest loan and helps you avoid impulse or emotional car buying decisions (a topic for another day).

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