People's Alliance offers more convenient car loan

It's not a drive-through loan, but credit unions say that it's at least a more convenient way to obtain a car loan.

The People's Alliance Federal Credit Union has signed on with GrooveCar Inc. for a program allowing its members to close car loans on the spot at about 50 auto dealerships on Long Island.

The move, the credit union said, is expected to boost its auto loan business by offering the convenience of quicker loans. Members will no longer have to stop by a branch to get an auto loan, as they had to do earlier.

Nearly 20 credit unions on Long Island, from Bethpage Federal Credit Union to Teachers Federal Credit Union, already have signed on for the program.

"It will help our members obtain auto financing quicker. Auto buying is usually impulse," said Nick Lacetera, president and CEO of the credit union, in Hauppauge. "It can put us face-to-face with our members, while they're purchasing a car."

The Hauppauge-based non-profit, originally the credit union for Pan American World Airways, diversified in the early 1990s as Pan Am ran into problems.

People's Alliance, which has about $165 million in assets, currently has only about $15 million in car loans, a small amount. But in its first few weeks with the system, Lacetera said, it closed nine auto loans it otherwise might have lost.

"This will help us grow," said Lacetera, noting the program is the first time People's Alliance has been able to make a big push for car loans. "This is just starting up."

Carmakers have long had an upper hand through their own lending programs, such as General Motors Acceptance Corp. and Ford Motor Credit. And many banks and finance companies developed relationships with dealers.

But credit unions have had a tougher time breaking into the market. That's changing, in part, due to GrooveCar's system, according to various credit unions.

When dealers sign on for GrooveCar's Credit Lend Union Lending Plus, they also agree to ask potential car buyers whether they belong to a credit union. That sets the wheels rolling for a loan that might otherwise have gone to another institution.

"At that point of time they're offered their financing through the credit union," said Lacetera. "Because of our size, we have never been able to get into indirect lending through the dealer."

GrooveCar in conjunction with the credit unions is taking steps to bring in more loans by providing special offers. GrooveCar said credit unions on its system are running a "loan sale" from July 12 to 21.

During that period, credit union members using GrooveCar can obtain loans with no payments through 2003 for vehicles.

"Usually a manufacturer will offer a no payments option," said David Jacobson, president of Groovecar. "This will be the first time that no payments option will be available on any make any model to such a large population of consumers."

Other groups that use the program include Nassau Educators, North Shore Health Services, Sperry, Suffolk County, Nassau County and Teachers federal credit unions.

Island Federal Credit Union, the North Shore-Long Island Jewish Health System and the Town of Port Washington are considering joining, Jacobson said.

The People's Alliance now serves many former Pan Am airlines employees, as well as various hospitals, labor unions, Waldbaum's and companies in the Hauppauge Industrial Park.

The credit union, which still operates a branch office at John F. Kennedy airport along with six others as far as Miami, has more than 40,000 members at about 400 companies.

Copyright 2002 Dolan Media Newswires
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Claude Solnik "People's Alliance offers more convenient car loan". Long Island Business News. Jun 28, 2002. FindArticles.com. 16 Jun. 2008. http://findarticles.com/p/articles/mi_qn4189/is_20020628/ai_n10165461