According to CO-OP Member Center, a subsidiary of CO-OP Financial Services, more and more credit unions have begun offering subprime auto loans at higher rates to buyers with credit issues.

"Most credit unions view subprime lending differently from subprime lenders, which thrive on the subprime market," John Caddell, credit and lending services manager for CO-OP Member Center, said. "On the direct side, credit unions may 'buy deep' all day, because they are making loans to their own members. On the indirect side, though, credit unions are starting to buy a little deeper than they normally would, but they still realize that it is a bit riskier."

One way credit unions are protecting themselves as they make subprime loans is by increasing their rates.

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