Conference 7.286::dcu

    Don't all lenders do this if you paid off your last loan without any
    late paymens? I just paid off my car loan that I had with a local bank
    and they sent me a letter (in the same envelope with the title) saying
    if I got another loan within 90 days I'd get �% off. However, I don'
    know wha their current rate is.
    
    -Glenn-

    re: .0
    
    Take out a loan for a truck that will haul all the pipe & stuff for a
    'really big show'!!!
    
    Lee  ;^)
    
    

CAR LOANS
---------

NOTE that USAA is NOT a credit union but a savings bank, but yet they do
better than DCU...  

USAA will refinance a car loan at any time at no cost.  You have a car
loan at another bank (including DCU), USAA will refinance it at no
cost ANYTIME!!!  This is a very nice feature.  You want to put $5,000
down and redo your USAA loan so the monthly payments are lower?  No
problem and NO COST (fee, etc.).

As part of the loan USAA offers, for FREE, as part of the loan, an
insurance plan that will pay the difference between what your car
insurance would pay and the loan value if your car gets totaled.

This works out well for people who get 80% or more financing and they
get their car totaled within the first 2 years of owning the car. 
During that time you usually OWE more on the loan then what the car is
worth and what the insurance company will pay!  Not bad fro FREE!

CHEAPER RATES
-------------

While at the car dealer (Toyota Autofair in Manchester, NH), they
offered a 6.49% rate from Baybank for 60 months 100% financing...

Even when DCU compares with Baybank (A REAL bank) they do not measure
up.

	- mark

    In another note somewhere I asked what rate of return all of
    DCU's "idle" (i.e. not loaned out) money was earning.  Phil
    responded that the average is 4.x% or so, which seems to be 
    an acceptable rate of return to those in charge of such things.
    
    Why then can't DCU offer 5% auto loans to its members?  What
    is the point of having the money earn 4.x% when it could be 
    earning 5% as member loans?
    

�While at the car dealer (Toyota Autofair in Manchester, NH), they
�offered a 6.49% rate from Baybank for 60 months 100% financing...
�
�Even when DCU compares with Baybank (A REAL bank) they do not measure
�up.
    
    Mark's right.  DCU's rate is a whole 0.01% higher.

    re .5:  My mistake.  The 0.01% difference between DCU and USAA is only
    for the promotion that DCU is running.  The usual car loan rates for
    DCU are (according to the latest LIVEWIRE):
    
)0 Digital Credit Union                           LIVE WIRE
 qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq
 Loan Rates (Weekly)                                         Date: 28-Jun-1993
 qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq
Page   1 of 1  
                          Annual Rate (%)      Terms      Amount Financed
      Fixed Loan             (months)           **           (%) ****
    --------------        ---------------    ---------    ---------------
  
    New Vehicle               5.90 *            12 mos.         100
                              6.90 *            24-60 mos.      100
                              7.50 *            72 mos.         100
                              
     Used Vehicle ***         6.90 *            12-24 mos.      100
                              8.40 *            25-60 mos.      100
                              
     New Motorcycle           8.90 *            12-36 mos.       80
     Used Motorcycle ***     10.40 *            Up to 36 mos.    80 
 
 
   Fixed loan notes:
  * Based on automatic payment methods(automatic transfer or payroll deduction)
    for full term of loan. Add .5% if other than automatic payment
  **   Based on loan amount and approved credit.  
  ***  Vehicle must be paid in full before it become 10 years old.
  **** The lower of 100% of purchase price or book value. 

re:  0.01%

Money is money, and 0.01% adds up to some number of dollars over time.
While one can argue that issues of convenience may erase any advantage
the competition has with differences this small, the fact remains that
the rate is still *higher* at DCU.

Chris

RE: Note 738.5 by PATE::MACNEAL

>�While at the car dealer (Toyota Autofair in Manchester, NH), they
>�offered a 6.49% rate from Baybank for 60 months 100% financing...
>�
>�Even when DCU compares with Baybank (A REAL bank) they do not measure
>�up.
    
>    Mark's right.  DCU's rate is a whole 0.01% higher.

Not sure where you come up with these numbers???  I hope you will take
the time to read and understand the work I have done to make this easy
for you to understand.  Would not want to have you make a phone call and
waste time and money (per your previous message to Phil that he do the
work for you)...

------------------------------------------------------------------------

Let us compare apples to apples... (Neither has automatic payment)

	DCU	7.40%
	Baybank	6.49%
		-----
	Diff	0.91%

Almost a whole percentage point!!!  Baybank easily wins...

With DCU's automatic payment and without automatic payment to Baybank

	DCU	6.90%
	Baybank	6.49%
		-----
	Diff	0.41%

Roughly 1/2 of a percentage point!  Still too much difference between a
bank and a credit union...  Baybank wins again...


With DCU's automatic payment AND their 3 day only special...

	DCU	6.40%
	Baybank	6.49%
		-----
	Diff	0.09%

DCU comes out ahead IF you play their game (direct withdrawl AND buy a
car during the THREE days they choose...)

This should NEVER happen...  A bank having better rates than DCU?

	- mark

RE: Note 738.6 by PATE::MACNEAL

>    re .5:  My mistake.  The 0.01% difference between DCU and USAA is only
>    for the promotion that DCU is running.  The usual car loan rates for
>    DCU are (according to the latest LIVEWIRE):

USAA did not have the 6.49% rate -- BAYBANK in Boston (DCU's competitor
had this rate).

Also not that DCU has a better rate by 0.09% when you have direct
withdrawl AND by a car during THEIR THREE day special...  You buy a car
a day later, tough luck!!!

Not sure where you come up with the 0.01% figure.  New math?

	- mark

I was a bit baffled about the fact that I could get 6.9% financing from 
a bank through the dealer, but not better that 9.9% from the same bank if
I was to approach the same bank directly.
So I did some research.  It turned out the dealer first of all marks up the 
percentage for a nice little commision (.5 to 1.0%), and that the bank
gives better rate since the dealer minimizes the bank's risk in case of a
defaulted loan.  In this case, the dealer takes the car back and sells it
from his/her lot, instead of the bank having to wholesale the car as a repo.

Now what would ever happen of the DCU gets into agreement with some dealers
and offeres a reate that no bank can match?  

Joerg

RE: Note 738.10 by ABACUS::LAVES

>I was a bit baffled about the fact that I could get 6.9% financing from 
>a bank through the dealer, but not better that 9.9% from the same bank if
>I was to approach the same bank directly.
>So I did some research.  It turned out the dealer first of all marks up the 
>percentage for a nice little commision (.5 to 1.0%), and that the bank
>gives better rate since the dealer minimizes the bank's risk in case of a
>defaulted loan.  In this case, the dealer takes the car back and sells it
>from his/her lot, instead of the bank having to wholesale the car as a repo.

This does happen.  I know in my case, this was not the case.  I spent
roughly 20-30 hours investigating what car I wanted.  This included
spending around $75 to get reports on the car (Intellichoice and other
reports).

I knew exactly what the dealer paid, how much he was going to get.  I
went into the dealer and paid $1,100 over the cost for a 1994 Toyota
4Runner.  There is a game to be played in doing this, but it worked for
me.  I know that every sales person at 3 different dealers know who I
am.  They think I am a cheap, well you get the picture.

It all depends on how you play the game...

You can also play a game with the bank and get them to drop the loan
amount, but it takes some work on your part.

>Now what would ever happen of the DCU gets into agreement with some dealers
>and offeres a reate that no bank can match?  

DCU does not need to get into this situation.  DCU should have LOW
rates to start out with because we have such a low default.  DCU should
give the .5-1.0% to its members, not the dealers.

	- mark

�                      -< Your turn to do the homework... >-
    
    I did Mark, and pointed out my error.

Mark,
I was not talking about the price of the car as such, I was referring to 
the percentage rate charged on the car loan that is being marked up by
the dealer.

In reference to your negotiated price: I am picking up my new 94 Grand 
Cherokee V8 today, with desireable color & options.   Got it for $300 
over invoice.  
I just ask to see the invoice and I am persistent (obnoxious if needed).

Dealers tend to have a photo of mine on their dartboard :-)

Joerg

    In some of the replies to note 738 there is mention of the DCU Auto 
    Sale taking place on March 24-26. If a car is purchased from particular
    dealers on those dates, the current new car loan interest rate will be
    reduced by .5%. A new car with a three year loan would be 6.4% instead 
    of 6.9%. 
    
    In contrast, Worcester Central Federal Credit Union is having an auto
    loan sale. For new cars, with up to 100% financing, rates will be 
    as shown below:
    
                    Term               Rate
                    ----               ----
                   2-3 years           5.49%
                     4 years           5.99%
                     5 years           6.49%
    
    These rates are effective from April 1, 1994, through June 30, 1994,
    and can be used for purchases from any auto dealer. The pre-sale rate
    for a three year loan is 6.99%, giving a saving of 1.5%! When I called
    about rates during the beginning of March, the loan officer told me
    that a sale was coming up and to wait to buy if it was possible. She 
    also advised applying for pre-approval to expedite the purchase. 
    
    My loan application has been submitted and pre-approved. Saturday I will 
    sign papers for a car. 
                                             
    This is a credit union that wants to do something valuable for its
    members. We have always had good experiences with them, and they are
    our primary financial institution for savings and investments. We are 
    considering moving our checking and credit card business there, too. 
    DCU will only have my short-term savings. 
    
    Linda

Do they require direct deposit, or automatic payment, or any other caveat
for this auto loan?

Chris

    No, this offer is available to anyone in their membership. 
    
    Linda

Thanks for the info, Linda.

Chris

    Linda,
    
    Do you know what the field of membership is for the Worcester Central
    CU? 
    
    Thanks.

    Membership is limited to New England Electric System employees and
    their relatives. NEES includes the following companies:
                    Massachusetts Electric Co.
                    Narragansett Electric Co. 
                    Granite State Electric Co.
                    New England Power Service Co. 
    My husband is an employee of NEPSCO. 
    
    By the way, one of the selling points for their checking accounts
    is NO FEES. 
    
    Linda

    
    
    
    	Just another data point in the area of Auto Loan rates from one of
    DCU competitiors. A couple of days ago I got a flyer from Workers
    Credit Union for a Private Credit Union Car Sale, similar to the one
    DCU had in late March. WCU's sale runs April 21-23. The rates quoted
    are:
    
    	New -	4.99% for up to 36 months
    		5.89% to 48 months.
    
    	Used -	7.29% to 36 months
    		7.49% to 48 months (for 92 and 93 cars)
    
    	Up to 100% financing available
    
    	No restrictions are listed on the flyer.
    
    

    
    RE: .20
    
    But doesn't the "Who says our rates aren't competitive?" show that DCU
    beats Workers Credit Union?  Anybody have the rates that DCU offered in
    its car promotion?
    

    
    
    Phil, this is what I just copied from the DCU March car sale flyer,
    which is still outside the LKG DCU branch:
    
    	New:	5.5% 12 months
    		6.5% up to 60 months
    		7.1% up to 72 months
    
    	Used:	6.5% 12-24 months
    		8.0% 25-60 months
    
    	100% financing available, automatic payment.
    
    Jim
    

    
    Is this correct then?  I assume their "Private Sale" was restricted to
    certain auto dealers?
    
    				WCU			DCU
    
    
    	New 12 months		4.99%			5.5%/6.0%*
	    24 months		4.99%			6.5%/7.0%
	    36 months		4.99%			6.5%/7.0%
    	    48 months		5.89%			6.5%/7.0%
	    60 months		n/a			6.5%/7.0%
	    72 months		n/a			7.1%/7.6%
    
    	Usd 12 months		7.29%			6.5%/7.0%
	    24 months		7.29%			6.5%/7.0%
	    36 months		7.29%			8.0%/8.5%
    	    48 months		7.49%**			8.0%/8.5%
	    60 months		n/a			8.0%/8.5%
    
    
	*  = without automatic payment
    	** = for 92 and 93 cars
    

    
    >Is this correct then?  I assume their "Private Sale" was restricted to
    >certain auto dealers?
    
    Yup, that table looks correct to me. I double checked the DCU flyer
    a few minutes ago to verify the +0.5% adjustment for not having the
    auto payment option.
    
    And yes, you are restricted to certain dealers, just as in the DCU
    promotion. Most of the dealers are different than the DCU private sale.
    
    BTW, I also grabbed a copy of the "Who says..." flyer, and DCU
    does have a better rate than WCU in there (6.90 vs 6.99 for 60 months &
    100% financing as of 3/9/94).
    
    Jim
    

    
    any chance we'll see lower auto loan rates as a result of the
    Fed rate cut?
    
    I'm not sure how the two tie togethor (if at all), so if someone
    would explain, I'd appreciate that too.
    
    --Bert

    My impression is that the DCU has been following market rates very
    carefully lately.  So if market rates on auto loans drop as a result
    of the fed rate cut, I think you should watch for a cut at the DCU, too.  
    The DCU has a goal of being our primary financial institution, and it
    seems to me that includes trying to be the best place to get an auto 
    loan, as well as the best place for savings, CDs. etc.
    
    Keep in mind, though, that no one other than certain DCU employees
    knows in advance what rate the DCU is going to set.  So nobody who
    reads this file, ESPECIALLY not the credit union volunteers (Board and 
    SC members) can actually answer your first question.
    
    	Enjoy,
    	Larry