TAMPA, Fla.—A lack of much interest by consumers in high-mileage, fuel-efficient cars can be seen in the low response rate to a special offer by Suncoast Credit Union that reduces the rate on a car loan by 25 basis points.
Suncoast is offering the 25-basis-point discount to members who take out a loan for a car that gets 28 miles per gallon or better. But the green initiative started by the $6-billion Suncoast more than a year ago has seen little interest.
“We have very few members go with this offer,” said Chief Lending Officer Vicki Lovett, who added that she is not sure if the member apathy is the result of lower gas prices or the low-rate environment.
What Suncoast is experiencing is in line with what auto pricing experts have consistently stated in the last year—compact and sub-compact high-mileage cars are not selling as well as manufacturers had hoped and built inventory around. As a result, these cars are not holding resale values well. At the same time sales of gas-guzzling trucks have been strong, with truck resale values outperforming all other vehicle classes.
To get the 25-basis-point discount, Suncoast members must also take e-statements. They must also have agreed to automatic payment from a CU account, something that returns a 50-basis point rate reduction.
“For our best paper, members can get a rate as low as 1.75%,” Lovett said.
The CU’s low auto loan rate landed Suncoast second in a recent Go Banking Rates survey of the best CU auto loan deals in the country. Lovett said auto lending at Suncoast is doing well.
“We are seeing strong growth in auto lending this year,” said Lovett. “We are up about 15% this year over last. That really is not surprising because there is a lot of pent-up demand for new cars in Florida, with the state hit so hard by the recession people put off buying a new car for a long time.”
Suncoast has had a green initiative for few years, which the high-mileage car discount is part of.
“We have several green branches and we are working toward a zero carbon footprint,” Lovett said.