CREDIT


Where to Find Cheap Loans

While big banks continue to cherry-pick borrowers, credit unions are opening up their vaults. Thanks to conservative investing and lending policies that largely sidestepped the subprime-mortgage mess, credit unions have plenty of cash on hand. Plus, interest rates on most loans average at least one percentage point lower than at banks.

Money for car loans, in particular, is flowing, as credit unions fill the void left by shuttered or frozen carmaker finance arms. Used-car loans recently averaged 6.65%, while banks were charging 7.45%. Average rates on new-car loans (6.4%) aren't a lot cheaper than at banks (6.7%); but a number of credit unions have teamed up with General Motors and Chrysler in the Invest in America program to offer an additional new-car discount if you finance through a credit union.

The program offers rebates of $500 to $1,000 on Chrysler, Jeep and Dodge vehicles and a "supplier discount" -- about $1,500 off -- on GM vehicles. These come on top of existing rebates from the manufacturers and are available nationwide on Chrysler models until June 30. The GM discount was available nationwide through March 31, and in select markets through June 30. At last word, Ford was in talks to join the program.

To get the discount, find out whether your credit union is participating at www.lovemycreditunion.org. You then apply for financing and let the dealer know that you're using the program. And you may even be able to deduct the sales tax on your new car, whether or not you itemize.

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Credit unions are doing land-office business in home loans, too. The dollar volume of real estate loans jumped 11% last year, says CUNA Mutual Group, a financial-services firm created by the credit unions. Rates for a 30-year mortgage recently averaged 5%, compared with 5.5% at banks, and home-equity lines of credit averaged 4%, versus banks' 5.7%.

Do you qualify? To get a loan, you'll need a good credit history, proof of income and, most likely, money for a down payment. "Even though credit unions may be more willing to lend, it doesn't mean that they have a lower standard for who qualifies for a loan," says Greg McBride, of Bankrate.com.

If you don't already belong to a credit union, you may qualify to become a member because of where you live. To see whether you can join one of the roughly 8,000 credit unions, check www.findacreditunion.com. Or join the National Military Family Association ($20 a year) to buy access to the Pentagon Federal Credit Union. More details are available at www.penfed.org.


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