There are times in life when the unexpected happens: unforeseen medical expenses; a repair bill that was higher than anticipated; or an item that needs to be replaced (my mom’s dog once ATE her COUCH)! Life does happen to everyone and eventually most of us discover how something completely unplanned throws a kink into our cash flow. For example, insurance costs have increased to the point where many people have raised their deductible amount, in an effort to decrease the overall insurance premiums to a manageable amount. It seems like a great plan until you suddenly have a large deductible that needs to be paid quickly.
One of the ways Dakotaland Federal Credit Union helps members is by looking at the bigger picture and trying to find the least expensive way to solve a problem. One of the ways you might consider is by “cashing out” the equity in your vehicle. If you own your vehicle, or if you have a loan on a vehicle, but the value of the vehicle is greater than the amount you owe, you have “equity” in your vehicle. In this case, you may have the option to refinance or take out a loan and access that equity for the cash you need.
Personal loans will always have higher interest rates than loans that use collateral, such as a car or other vehicle. By using the equity in your car, the interest rate is less, which will in turn make your payment less. In this way, your credit union helps you use the assets you own to increase your lending power. Less interest and smaller payments help with budgeting and can be a terrific way to get that unexpected bill taken care of without the added stress.
For example: Mary Member has a Pontiac Grand Prix which she owns and has maintained ownership of knowing it will someday be the first car of the soon-to-be teenage driver in her home. One day, the soon-to-be teenager is out riding bikes with friends. No one quite knows HOW it happened, but our Young Member needs to be taken to the hospital and after a lengthy examination, it is determined an arm is broken. Surgery is required plus an overnight stay in the hospital. Mary wishes she had taken out that supplemental accident policy, but it is too late for that now. Her deductible was met last year when her husband received cancer treatment, but it’s a new year now, and she needs to come up with $3000 or the hospital will be turning her account over to collections. Her husband is still recovering from cancer treatments and not back to work, and she is trying to keep her household in order.
Mary is beside herself with worry when she walks into her Dakotaland branch office obviously at her wits end. The teller notices her stress, and asks a couple more questions, then suggests she visit with a loan officer. After careful review of her situation, the loan officer suggests she use the Grand Prix as collateral for a loan, then she can use the “cash out” to pay the medical bills. Her payment is a reasonable amount that she can repay to the credit union over a period of months. All while keeping everything easy to manage and close to home at the credit union. The bill is paid, the teenager does heal, and she returns to a happy home instead of one filled
with financial stress. Best of all Mary knows the financial professionals at Dakotaland Federal Credit Union are more than tellers and loan officers—they are people, just like herself, who understand the ups and downs of life. Mary can’t imagine her money, or her financial relationship, with anyone else.
It has been proven credit union members save hundreds to thousands of dollars each year depending on the number of products and services they use. Over a span of five years (this is the average term for a vehicle loan), this can make a major financial difference. Credit Unions exist to serve our members. It is why we are here! One of the most important ways we can make this happen is by helping each member through their unique situations. There are no automated machines that can do what we do by valuing each member and working to ensure you receive the best benefit from their member/owner relationship with us.
Using your vehicle’s equity for cash is just one of the many ways we can personalize the assistance we provide to help our members reach their financial goals. Most importantly, we understand life can bring unforeseen events that cost money, and there are many circumstances which could make extra cash hard to come by. Because we are here to help, our staff will strive to give the best advice to help members with each unique situation
