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Auto Loans – It’s Crazy Out There – Read Your Credit Union Contract Carefully

arkovich_law-narrowThe 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.

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