Cars for sale at a Central California auto dealership. (Source: Shutterstock).
To enhance its competitive position for new and used auto loans, the $1.6 billion Financial Partners Credit Union in Downey, Calif., recently decided to offer a job loss protection (JLP) benefit at no additional cost for members.
"We looked at the auto market and we see that dealers are extremely aggressive," Lori Reeves, SVP and chief marketing officer at Financial Partners, said. "They are back to the 0% rates, even on terms up to 84 months, payment deferrals and many are offering job loss protection or a similar benefit to address peace of mind, as well as other incentives. To be competitive and ensure our members get a great deal when they buy a new or used car -including private party sales – we added job loss protection to our great low rates, and 90-day first payment deferral option."
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For qualified members, the credit union's free JLP benefit includes up to six payments if the primary borrower becomes involuntarily unemployed because of economic reasons within the first 12 months of opening a new auto loan, with a maximum benefit of $3,000.
Although financial institutions offer the JLP benefit for a fee, Financial Partners believes it is the first credit union to offer the benefit at no cost.
"Our goal is to support our members and give them the peace of mind they need during these particularly difficult times," Financial Partners President/CEO Nader Moghaddam said. "We are taking every opportunity to help our members manage the economic downturn. This new benefit reassures members that if they become involuntarily unemployed due to economic reasons, we have their back and are looking out for them."
Financial Partners serves more than 84,000 members.
In July, U.S. new car sales dropped 18% compared to July 2019. However, used car sales picked up 9% in July compared to July 2019, according to the Santa Monica, Calif.-based ALG, a subsidiary of TrueCar, an automotive pricing and information website.
"Lower than average inventory levels on new cars as well as economic uncertainly may be causing some consumers to opt for used vehicles," Eric Lyman, ALG's chief industry analyst, said. "TrueCar marketplace data shows similar trends, with 11% of consumers who connected with dealers for pricing on a new vehicle ultimately purchasing a used vehicle. This is up 31% versus July 2019."
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
