Auto Loans – It’s Crazy Out There
The average auto loan interest rates reported by DealerTrack are getting crazy high – hitting a decade high now:
- New cars: 8.41%
- Used cars: 12.88%
Credit Unions are still around 4% -6% so that may be the best option for now.
As bankruptcy attorneys, there are some cautionary tales involving car loans and credit unions that everyone should consider. The contracts that a credit union uses for car loans often have anti-consumer clauses which can be very harmful if you get into financial trouble.
- Cross-collateralization (this means if you can’t pay your credit cards, you may lose your car)
- Waiver of garnishment
Credit Unions are also notoriously more difficult to settle on favorable terms.
So while the interest rates may be lower; ultimately, a Credit Union financing could cost you more if you end up defaulting on the loan.
