Scott: [00:00:00] Dollars and Cents with HAPO Community Credit Union helps empower our listeners to achieve financial success while living for today and planning for tomorrow. This podcast focuses on financial education, community support, fraud prevention, real life stories of financial transformation, and much more.

HAPO Community Credit Union serves Washington and Oregon with over 18 locations. Bank on more when you bank with us. Hi everybody, and welcome back to another episode of Dollars and Cents. This is HAPO Community Credit Union. Financial literacy podcast today in the studio. We've got Levi and Todd with HAPO community credit unions, consumer lending department.

We're going to be talking about the ins and outs of lending, how that works for our members and why that group exists in general. And it is, I would say more so than in general one of the bigger, more important pieces of the credit union itself. Gentlemen, welcome to the show. 

Levi: Thanks for having us.

Yeah. Appreciate it. 

Scott: So [00:01:00] Consumer lending is when we start talking about credit unions, a major part, if not the most foundational part of the credit union movement. What can you guys tell me more about that? 

Levi: Yeah, I think we were just talking earlier off podcast about somebody here that's buying their first car.

That's a part of consumer lending, getting a credit card. Anything, basically it's not a mortgage or a business loan would fall under the consumer lending section. So for some people, it's their first time experiencing, you know, consumer lending and getting a loan for a lot of people, they've been using it their whole entire lives.

So I mean, we'll get more into the credit side of things kind of the environment that we're in today and, and why it's important to be educated and, you know know your stuff. 

Scott: Yeah. And the original purpose of credit unions was community members coming together, pooling their funds to assist other community members like, Hey, we need this person to build this facility to help out the community.

So we're all going to pull our stuff. Then once they've got that, [00:02:00] they'll help contribute to your next project. And so lending is a major cornerstone of credit unions just in general. 

Levi: Yeah. And I think what really separates the credit union from the bank as far as lending goes is like you said, it's, it's our members deposit.

I'm a member at HAPO. It's, it's our money. We're the shareholders here versus a bank where they have to flip a profit to pay their, their investors. On our side, we're a not for profit. So we're not concerned. We have to, we have a fiduciary responsibility to, to make good business and make sure that our, you know, our business grows and we stay healthy.

But as far as making these massive margins and these massive profits, it's not the idea. It's to make low rate loans to our membership. I was gonna say. I deposit my money here and I wanna get a good loan rate back. 

Scott: Yeah, and that's kind of what that is. We're not driving towards profit so we can work with those lower interest rates and kind of better lending [00:03:00] situation for our membership.

Levi: Yeah, and part of it too is the credit union, I guess part of the credit union mission is serving the underserved. And so while, you know, we don't lend to every single person that walks in, like I said, we have a responsibility to make sure we're doing good business. But also make loans to our membership and if, if you are working on building your credit, we'll work with you to, to figure out how to make a loan happen.

It's, like I said, it's, it's up to the, 

Scott: Yeah, we've had a number of different episodes where we talk with our financial coaches about helping people build up their credit score so that they can get those loans to help move them along. It's not just, sorry, you're not our ideal customer. So a pound sand, it's how can we help get you to this goal of yours?

And of course, consumer lending is a big part of. Getting people to those goals. Yeah. 

Levi: And it's cool, too. I mean, just the journey of your credit, you know, it doesn't start with you get your first reason. Oh, I'm done with with getting loans from half. I mean, our idea to we have our fin ed people that go out [00:04:00] to different office buildings or go out to you know, different workers and they'll they'll come out and set up a checking account and savings account and get them signed up with a credit card or get him on auto loan.

In hopes that you have a full relationship with us, that eventually you get your mortgage with us, and you get business loans if you're a business owner, cause once again, it's, you know, it's, it's your money, it's our money and we're here to lend it out. So, 

Scott: yeah. Make the community a better place. In general.

I mentioned building a credit score that obviously is going to be a big deal in your guys's world. When you're looking at those loans, those good financial decisions that we can make, what do people need to know about their credit score? How that comes about to give them a solid starting place if they're coming out looking for a loan?

Todd: Yeah. So there's the, this is credit mix. All the credit bureaus depending on what you're doing. what algorithm they use. They all add up everything that you've done that reports to them. That could be inquiries. That's your addresses get reported. [00:05:00] Of course, all your payment histories, your credit lines, how you use it.

And really for the last decade or anything that's reported within the last 10 years shows there. And so even a line of credit that's been closed for nine years it still shows up there. It'll, it'll, it'll fall off in another year, but anything you've made a payment on or done in the last 10 years shows up there.

And so controlling that and paying attention to that and making sure all that info is correct and that you know exactly what you're doing when it comes to your credit cards or your credit lines or your mortgages it becomes super important. And controlling that and making sure that you have a good credit score in the end is, is saves people a ton of money.

Cause obviously the better score you have, the better rates you get. But it's a, it's a mix of the credit cards installment loans, auto loans and mortgages. How long those loans have been opened your pay history with those. And then when it comes to credit cards, it's how much of that credit limit are you using?

Okay. All of those are, are super important. And they're all taken into effect or into account, I guess. 

Scott: So, you know, if I've missed a payment in the last 10 [00:06:00] years on that credit report, that's obviously going to completely deny me from this thing, missing just one payment. 

Todd: No, 

Scott: no, of course not. Because this is 10 years worth of stuff.

If one payment is going to be the end all be all of everything, then this is a much harder to get into scenario. 

Levi: And credit, I mean, personal credit ebbs and flows, too. Just like, you know, throughout your life in your bank account, there might be ebbs and flows, too. You might be in really good times and have a, a great store, and then, you know, you kind of fell off a little bit and you're rebuilding.

And that's also parts of what we're willing to help work with, too. Because you can come in and apply for a loan. And while we might, you know, not be able to give you the entire thing at that point, at least we'll, you know, give you a counter of, hey, this is what you need to do in order to get this kind of loan with us.

A little bit of guidance. Yes, a little bit of guidance, too, which I think goes into the financial education piece of it, too, because we're not here just to say, Yes and no. That's it. See you later. Have a nice day. 

Scott: Yeah. And you mentioned the the credit limits, like the line. Is there a guideline that people should be looking at [00:07:00] as far as like how much of their credit they should have utilized?

Is it good to keep it at zero? Like, I've just got a lot of this credit that's available to me. If I'm always at zero, it's great. Do I want to show that like, Hey, I'm using 70 percent of this and I'm paying it back regularly. Do either of those make me look like a better candidate? 

Todd: So it's, that, that one's, I don't want to say controversial because people, there's a lot of advice out there that says you have to use your card and then you have to have a balance on it that reports and then you have to make that payment.

The way, the way the credit companies calculate everything, you don't have to ever pay interest on any loan you make or on any credit card you use. Right. So you can use it, pay it off in the same cycle. They're going to report an on time payment. You didn't pay any interest, but you get that on time reported.

If you have to carry a balance, 50 percent of whatever the limit is. Ideally you'd keep that below 30%. To, I guess, have a, an improved score. But 50 you, you really don't want to go over that. [00:08:00] 30 is probably the cap, but also, you don't have to carry a balance to build a credit, to build credit 

Levi: on that card at all, so.

Okay, and I, I, I was going to say this too, I think this is important is, this is another misconception of, you know, we've had people say, Oh, I, I have a maxed out credit card, I was told I'm supposed to carry the max to, to show that I can hold the max balance, you know, like, there's a lot of misconception that way.

As one of the characteristics when we're looking at your credit score, it'll show a plus for a month that's a payment as agreed, a good payment. That plus, how you earn that for that month of you made your minimum payment on your credit card, it could be maxed out and you paid the entire thing off. You have a 30, 000 credit card and you made a 30, 000 payment, you get a paid as agreed.

If you have a 30, 000 credit card and you go and buy a packet of gum from Yokes, Yokes. and then you make a payment towards it, you still get to pay it as agreed. So they look the exact same. 

Scott: I was going to say that was going to be my next question was, does it matter how much I'm paying [00:09:00] off on these each month?

Levi: Unless you're holding a balance. 

Scott: Okay. 

Levi: Yeah. So if you're holding. At which 

Scott: point it's the minimum. 

Levi: Yeah. Yeah. So yeah, there, it depends. Some people have a minimum 25 or minimum, a certain percentage of the balance that you have to pay. As long as you make, which goes back to 

Scott: the agreement that you have on that particular loan or card the agreement is that you would make at a minimum 25 payment or at a minimum, this percentage of the balance that you're current currently carry, carry, excuse me, currently carrying.

And that is the agreement hence paid as agreed, correct. So again, like 2 for a pack of gum, swipe that, make that payment as soon as I get home. That still marks me as I have. Followed the agreement. I have made my payment. 

Levi: Correct. Yeah. Yeah. And also, I mean, it's important to that. Some people will say, Oh, get as big of a credit card as you can and then stick it in your safe and never use it.

That's another misconception too because you know, you, you want to try and [00:10:00] use it so that you can keep that credit line open because depending on the different institution that you're getting that card from you might not have used it in a year and they just say, you know, they'll cancel your card on you.

So go 

Scott: to buy that pack of gum and all of a sudden you get declined down at rocket Mart. Exactly. 

Levi: And Todd was speaking about the credit mix of you know, different like capacity. That's how much. Can I borrow if a rainy day came and I've got three credit cards and it totals a hundred grand? I can borrow up to a hundred grand.

That could get you a long time. Right. And so if you, if that's closed and you know, the months prior, you had 100, 000 in capacity and then your 30, 000 card gets closed. Now you only have 70. That's going to negatively impact your credit, your credit scores. And kind 

Scott: of like what we were talking about, if you're carrying a balance, you mentioned 30 percent a good.

That's rule of thumb type of range. And if all of a sudden you lose $30,000 worth of available credit Mm-Hmm, , that 30% may have just jumped up to exactly 50 or 60% of your credit used. 

Levi: Yeah. It's pretty complex algorithm, how [00:11:00] different places calculate it. I don't know if you want, you talk about the bureaus too, of 

Scott: I was just say, yeah.

Who, who are they? 

Todd: Oh, the three main credit bureaus are TransUnion, Equifax, and Experian. Okay. And so and I do have, we have a, another presentation that we do for some people where it's, Oh, I don't remember it. Equifax and Experian have 16 different variations of scores and TransUnion has 21 different variations.

And so depending on who pulls your credit, when they pull your credit, and what Bureau, they request from that credit company. You could, you could end up with one of, you know, 40 different scores. And so that's that complicates things and messes things up. I was going to say, we, we 

Scott: taught, we talked to people about their credit score, not one of their 40 credit scores.

Todd: So it's. Yeah, very complicated, but and I can't even pretend to know exactly how they pull it all off. But some of them are very specialized some of them are general, you know, [00:12:00] everything that they can report. And some of them are based on credit cards specifically, or some of them are based on your auto history.

So, and I believe different industries, the insurance industry, when they were requesting credit, they request a certain amount of credit. Certain Bureau was going to say that makes sense. I 

Scott: believe that in our last episode, we did chat about mortgage, pulling your credit and that being different and how that could be impacted one, like it could come back as a different value on a different day of the week based on, and I believe they were talking about when you're pulling that and getting your, your pre approvals and whatnot, making sure that like, These are the, are the, the situations.

If anybody's interested in that, feel free to go back to the last episode and listen to that. Carol and Brittany had some fantastic mortgage related information for people there. 

Levi: It's awesome. And to that, I don't know if this is what you're kind of leading to the savvy money piece of it. 

Scott: We can absolutely go there for her tools that will help people evaluate and track those things.


Levi: Just with, [00:13:00] you know, a different day or you, you get your credit pulled one day and then you go to the next dealership, you get it pulled and it's something totally different because they might be using a different model. If you come into a HAPO branch well, I guess first off your your HAPO app, right?

Yeah. Absolutely. If you log in and look and you can look at your credit score we use this company called Savvy Money and it'll show you what your score is and it gives you a bunch of other tools and tips on, on building credit, maintaining credit. That model that we use is called Vantage 3.

0, which is from TransUnion. It's a, what would you call that? Just a sect of TransUnion or one of the models? 

Todd: It was a combination of all three of the credit bureaus coming together and essentially trying to create a competitor for the FICO score, which is the tried and true. Everyone uses it. I believe the mortgage bureaus are all FICO as well.

But the three credit bureaus came together and they wanted to, to make something to compete cause FICO on the market. When they came up with the vantage scores trans union is the one that I think primarily holds [00:14:00] that. Hopefully I'm right on that, but They're the ones that tend to come out with the new, new versions of it, right?

They're the, they're the ones that continue to I guess Advertise that they're, they're working on new algorithms with that Vantage score. So it's really competitor The Vantage scores take more into consideration. The, the tried and true FICO, it's, you know It's like four or five different things the Vantage scores I think six to eight different pieces of information to calculate a score for you.

Levi: So it's a, it's a great model, but we, we use that for if you're looking at your credit score on your phone and then that day you go into a HAPO branch and you say, I want to apply for an auto loan. And we go and pull your credit while you're sitting in branch. It'll be the same exact score, which is kind of neat, too.

So you can plan and watch your credit, you know, grow and build. And then we have all sorts of loan calculation tools on our website, too, that you can go look at our current rates based on your score and get an idea for your payment, what you can afford. But it's a, it's a really neat [00:15:00] tool.

Scott: Okay. I have an interesting question here. We talk about pulling credit score and that does actually when your credit is pulled, that does a minor impact on your credit score itself. So if that's the same number, can I, if I'm signed up for savvy, can I come in and be like, don't pull it? This is my number.

And, and then it wouldn't have to be pulled or is that something that on the back end we're pulling that, that credit score because there's more information than just that final score that we need to look at? 

Levi: Correct. Yeah. So we in on the underwriting side of it, that the person that's actually evaluating the loan, the credit worthiness of the loan of the borrower, their current financial position, right?

the credit report that they pull is going to look different than what you're looking at on your phone. It's kind of a dumbed down version that, that really simplifies it where on the underwriter side, they have to see every single trade line. They have to see the dates that things were open and closed.

So it's a 

Scott: lot more complicated. Like we said, one out of 40 credit scores, but it's not even just the score. It's, [00:16:00] it's all the underlying stuff for you guys. behind the scenes, but for me as the consumer, knowing that number is going to be more than enough to get an idea of what my loan is going to potentially look like.

Exactly. So as of right now, let's say I've got a really good credit score. I haven't looked at mine in a little bit. I believe it's pretty good though. I'm going to go on to HAPO. org, take a look at our say auto loan rates. I'm going to see a chart that shows me different terms. I believe what 60, months roughly.

And then a different variations on whether this is a new car or a used car and I'll get a good idea of what that rate could be. Yeah. 

Levi: Based on your score. Correct. 

Scott: And I'm going to be stuck with picking one of those three options across the board, 60 months, 72 or 84 when I go and finance. 

Levi: Yeah.

And, and there's some wiggle room there too. Okay. Yeah. You could, you could finance on 12 months if you wanted to, or 24 months if you wanted to. Okay. Those are just kind of our, our placeholders and something that [00:17:00] makes HAPO unique too is you know, on that 60 month term, it'll show, you know, say we were at 6.

49 percent in 60 months for said credit credit score. We will also offer that same rate at 66 months. Okay. So we'll, we'll do like a six month term extension. We'll do that on 72 months as well. So 72 months, we'll do 78 months at that same exact rate because the further that you go up in rate or in terms from 60 to 84 months, the, the, the rate increases, right?


Scott: but that payment might be dropping off for a monthly payment. That's a little bit easier to handle. 

Levi: Exactly. Yeah. So the, the person that has. It's unlimited money in their account that, that just wants to pay as little as of interest as they possibly can. They might want to finance on 60 months because over the life of the loan, they're paying less interest.

They're, they don't really care about their monthly payment as much where somebody that might be getting their first car. and they're a little bit more budget conscious they might go, well, I just need, [00:18:00] I don't care about how much I pay in the long run. I just need to make sure that I can afford this monthly payment.


Scott: I'm budgeting at monthly and not annually or even five years down the road looking at that interest. Exactly. I'm going to pay totally. I just need a vehicle that's going to be able to get me to and from work so I can make the payment. and be focusing more on that. 

Levi: So that might push them, you know, towards the 84 month term where their payment is going to be lower because it's another year over the 72 month term.

But that's just another option to look at. If you're you know, you're, you're still conscious on the amount of interest that you're paying instead of just going to max 84 months, look at a 78 month term, you know, does that make more sense? I'm going to pay my auto off six months sooner than I would have if I went 84 and I'm going to pay less interest.

The payment might be 30 bucks more a month or 40 bucks more a month. But those are all options that can help you in the long run. 

Scott: And effectively working down into your own personal budget to make that final decision is always a good idea. But knowing that it's not just [00:19:00] like those limits that are listed on that, on that table up on the website, I think that's a, that's a pretty useful piece of information for people.

Levi: Yeah. And something that, like I said, is unique to us. There are some other places that do similar things, but it's not industry standard that, that they allow, you know, a term extension on that. And Todd and I were talking before this that the, the total amount of your cost of your car essentially, you know, so if, if you are, what's important to you, if you are budget conscious on, you know, 84 months or set the 78 months as, as your payments going up, your auto payment is not your only expense related to that car, right?

Insurance amounts have increased significantly over the course of the last four years. Gasoline is more expensive. There's, you know, or 

Scott: electricity if you're going with some Tesla, 

Levi: exactly. Yeah. And so there's just other costs associated. So just figuring out what you reasonably want to spend 

Scott: as well as potentially you mentioned insurance.

But I know part of that that people will probably want to [00:20:00] consider are things like the gap insurance. We had an episode with Domingo on who talked about he, he kind of jumped the gun a little bit, bought his dream car and a couple months into owning it, ended up in an accident with it. Not his fault, according to him and ended up upside down on his loan.

He was like, I had gap insurance on every car up until this one. And I just, it just, I refinanced it and I just didn't get that added back onto it. And that was the one time he knew that he needed to end up upside down. But Managed to get his way back out of that, got a different car, and eventually got back to what his dream car was.

That additional cost being, being more than just the loan. 

Levi: Yeah. Things that you can never plan for, but you're glad you had it, you know, at the time of the incident. So 

Scott: yeah, it's one of those things like that, that extra expense, that peace of mind, as opposed to like, Hey, I never needed it. Was it a waste?

Right. I don't know. Did you feel good about it? Yeah, it was probably fine. Then it was also a good plan because if you didn't have it and something did happen, [00:21:00] how much are you out at that point in time? 

Levi: Yeah, absolutely. 

Scott: So we're talking about the the loan, not being the total cost of, of everything, the insurance, the other additional coverages that you can get with those how much, if at all, does that impact the rates that are available?

Or is there, are the rates mostly just going to be impacted by my credit score? What other outside factors come into that? 

Levi: Yeah basically just your credit score. Yeah, which is why it's so important to have intricate knowledge of what goes into it. People are going to be more likely to lend you if you have a good credit score.

And it's obviously, yeah, going to help you on the rate and the payment. Yeah. Your credit score is 

Todd: the primary driver of what rate you're going to get. Obviously the term, so the difference between your 84, it could be a quarter point, it could be a half a point of interest it makes a small, a small difference in how long you finance but your credit score really is your primary driver on all [00:22:00] that stuff, so.

Levi: Yeah, and we can't just make up the numbers. rates just to make up rates either. Like we're, you know, just because we've had this, I 

Scott: can't come in and be like, can I get a 0. 25 percent loan? 

Levi: Yeah. It's not an arbitrary number, just like the federal reserve, which is kind of how we set, you know, our rates. We don't just make up one day and say, Oh, we're going to charge 6 percent for a car loan.

It's just not how it works. It's driven by, you know, the fed and their policies and the current unemployment rate and inflation and all of those different things. 

Scott: And of course our need to. Still follow and have a fiduciary responsibility to make good decisions based on those things. 

Levi: Yeah. And on the side too, of like you had, or we had been talking about earlier on, it is our money and we want to make it in good, low rates.

Well, on the other flip side of that too, we also want to offer high dividends on deposits and on CDs and whatnot. And so. So that's the spread that we have, the difference between what we're paying our members on their money versus what we're lending out in their money, that difference there where at the banks they [00:23:00] might want to widen that as wide as they possibly can.

Us, you know, it's, we're, like I said, we're not a not for profit. And so that's not as or not a factor and why we set our rates where we do. 

Scott: So when we start looking at say timing, like I've got a very nice car, it's functional, I don't have any issues with it, but maybe I think that there's a really nice looking car out there.

What are the type of, I guess environmental factors that I should be looking at that maybe around the world might impact that fed rate that allows those, those rates right now where they're at, maybe to drop a little where I'm like, Oh, now this looks like it might be a better financial decision for me to be able to, to jump out and go buy, you know, my dream car.

Thing I don't have to do, but maybe I want to, I want to bide my time and look at the environment a little bit. How do those rates shift? 

Levi: So I was just going to speak on the fact that a low rate environment creates a sense of urgency for the buyers, right? They have like the fear of missing out [00:24:00] the dream car thing, right?

It just seems so much more attainable because they're not paying eight, nine, 10 percent interest on their car. They're paying 2%. And so that payment might be, you know, a hundred or 200 less a month. While a low rate environment obviously is great for the consumer, it also can make people stretch themselves a little bit thin where in a high interest rate environment folks are, you know, kind of navigating the market with a bit of caution and really making a solid financial choice on what they can actually afford.

As well as 

Scott: probably the fact that they need to make a move to do something. 

Levi: Yeah, exactly. So not getting the, you know, 800 horsepower Hellcat that is like my, you know, dream car that might seem more reasonable in a low rate environment and, and making, you know, getting a car loan that makes sense. I guess that's kind of, kind of a bit of the difference of the consumer mindset in the, in the two different rate environments.

Scott: Okay. I can see that. Absolutely. Like if I think I'm going to get a much better [00:25:00] deal on, on my interest rate, it's going to drop that payment. hundred bucks or something like that, that maybe I, maybe I splurge and go for the the higher end power vehicle as opposed to a, a nicer grocery getter, drive around town type situation.

Levi: Yeah. 

Scott: Is there any major difference between me picking a dealership? To get mine from like, do dealers run specific specials where they're like, no, no, no, come to us. We can get you 1 percent cheaper on this loan or, or do they have any sway over what those rates are? 

Levi: It's, I mean, I guess we haven't talked about the direct versus indirect, which is our side of it.

We do both. The you can walk in branch and get alone with us, or or you can just go straight to the dealership and do it all through them. So we have great relationships with a lot of our dealer network, especially locally or close to branches, which our program is [00:26:00] called dealer direct. It's a, you know, we pride ourselves as a relationship lender and we want to do good business with good people.

And so a lot of times that people that we do business with will run specials for as a thank you because they are sending our members that are at the dealerships to us so that we can give them loans. So it's not 

Scott: so much that they're running a special as it is that We're providing a, a better type of a rate that they can then pass through.

Levi: Exactly. Yeah. And I mean, it, it, it goes both ways, I guess, too. Because in return we're getting, you know, more of that business back. But yeah, we, we're not super rate conscious on, like I said, the spread that we have to make all this. So, yeah. Our ability to, to offer, you know, things like that to help our membership out is, has been a great, a great tool as well.

Scott: So you, you mentioned very specifically direct versus indirect me coming into a branch and saying, Hey, I want to get a loan so I can go buy a car [00:27:00] versus me going to a car dealership and saying, Hey, I want to buy this car. I need to get a loan. Is there a preferred way or does it basically all work out kind of the same?

Levi: It's up to the, up to the consumers. Some people just like stepping foot in and they know their person they always sit down with that helps them with their loan. They like to shake a hand. That's just fine to do. You're going to get the same kind of rate that you would if you went just straight to the dealership.

I'd say the only real difference is probably just the speed of the process. You can just go walk over to X dealership in Tri Cities. That we're doing business with indirectly and say, I want my loan at HAPO. And they go, sounds good. They shoot it over to our underwriting department. We underwrite the loan.

We say yes. They do everything on their side. You don't even have to step foot into a HAPO branch. And then you drive off with your car. So it can slow or speed up the process just going straight to the dealership. But you can, you can do either way and get the 

Scott: same result. It's [00:28:00] basically like. Call it a month after the purchase.

It there's no really no difference between the two. It's just Convenient versus I really like working with Levi's. Yeah, I'm gonna come in And, and make that, that decision with you, maybe talk a little bit more financially about what I can afford and put me back in my place that, that 800 horsepower Hellcats a little outside of my reach at the moment.

So maybe, maybe look at a Buick 

Todd: say that anybody that's not familiar with their credit score, not familiar with the process coming in branch, sitting down with a financial service specialist should be eyeopening, right? Because we can educate you on. On what your score is and therefore what interest rate that you could potentially get.

That way you don't walk into the dealership and then just sign paperwork for something that later you regret. That's a great point. So if you come in sit down, we can help you research the car, we can let you know what your credit is, what your rates would be and maybe the process, a little bit of the process.

So if you're new to everything, I think that's coming in and [00:29:00] visiting us is ideal. And we have members who have been with us for 30 years who still do. come in the door and they want to get their pre approval before they go to the dealership. They just want the comfort that they are, that they're approved and that everything's going to go fine at the dealer.

And 99 percent of the time it does anyway. So 

Scott: nice. I think that that is something that we've, we've advocated for quite a bit on here is take your time and plan ahead, budgeting and any of those things, any, any extra amount of information that you can get. It's going to help you out and make you feel a bit more comfortable.

And I think, like you said, something that, that might be underestimated is the confidence walking onto the dealership, because let's be honest, for some people, car dealers are, are stereotyped as sharks. They're going to come get you. They're going to get you for everything. If you walk out there and tell them that you might be able to afford a 600 a month payment, they're going to do everything in their power to make you pay six 50 a month.

And that, that kind of. idea or stereotype that people have. If you have more of an idea, knowledge, foundation of what you can [00:30:00] afford and what you're looking for, walking onto the dealership, I think you have a little bit more of a confidence going into that. Maybe like you said, don't get taken for all the different things that they have to offer there.

Levi: Yeah. And I would say to add to that side too, I think Todd's point of coming in branch and we are all about financial education and making you make your best decision or helping you get to your best decision. But on the dealer side, too. Yeah, those stereotypes are there. It happens at dealerships for sure.

However, we also do business with you know, a specific amount of people. We don't just sign up every single dealership in the entire Northwest and say, we're doing business with you. This is a list that we have relationship managers that are going around to that are monitoring you know, how they're doing business.

And if at any point they're not doing business in a way that we see fit, we won't do business with them. You know, business with that dealership anymore. So it's a group of dealers that we're comfortable doing business with and sort of representing HAPO outside of in a way it's almost like they [00:31:00] are Todd talk or was talking about the FSS that they sit down with.

You've always sat down with the dealer really is if we're doing indirect business with them. They're kind of the quote unquote FSS at the, you know, the dealer that's representing HAPO as an FSS? 

Scott: Yeah. Yeah. And if anybody's interested in seeing that list, we actually have it posted on going under our loan section under auto loans.

There's a entire research calculators that you mentioned earlier links out to different different research sites like Kelly Blue Book and some of the other, other evaluation sites to take a look at like, say crash test ratings and other things. If you want to, if you, if you don't know where to start, it's a great place to go find some information.

But then we also have an entire list based on region of those different dealers that we work with. So if you want to make sure that you can get a loan through HAPO. That is a great place to go take a look. Is the dealership that you think you want to work with on that list? And then you can evaluate which one's more important to you.

[00:32:00] The financial institution that you'll be working with for the next 60, 72 or 84 months or the dealership that isn't going to call you unless they want a referral. For the life of your car. Which not to say anything bad about the dealerships. There's honestly all of them that I've worked with have been fantastic in the past.

But if you're looking for a place and you don't know where else to go to find that information, hapl. org's got a lot of that listed for everybody that's out there. 

Levi: Yeah. 

Scott: What do we have outside of auto lending that is more in our consumer lending? Do we do personal loans, payday loans? Do we take people out back and hit them in the kneecap with baseball bats on very sub Obviously we don't have enforcers.

Todd: You know, as we joke around, the only thing that we don't lend on is tractors and airplanes. But as far as personal loans, we, we call them signature loans, it's a personal [00:33:00] loan. We offer those, the payday loans. One of the caveats to the payday loan is you do have to bank with HAPO and have a direct deposit with us.

But we do offer those small loans to, to get people by. Of course the Visa cards, which you guys have done. Yeah. I think different episodes on. We do land on RVs and boats. Utility trailers, horse trailers are pretty popular on the side of the mountains. And that includes, I guess we could go, you know, dirt bikes and ATVs and the side by sides. So we offered, you know, full the full run of products that most other institutions will land on. But we we offer on those two. So 

Scott: So on the signature loans, are we talking secured or unsecured on those or potentially both? Unsecured on those. Okay. So, 

Todd: you can do a, a secured. Secured loan. I feel like that one gets tracked slightly differently, but we have, we have a shared secured loan where you can borrow against your own money at 3 percent over whatever [00:34:00] you're earning.

Okay. So if you have a large amount which in the high rate environment, honestly, might make sense for somebody cause you can, you can borrow at three and a quarter on your money as opposed to whatever you're earning. borrowing a bank's money at 6% something like that. But that, that would be a secured loan, but the signature loan is really just, you know, cash into your account and then an agreed upon payment over the next 24 months or so.

Scott: So shorter timeframes on those loans, probably not hundreds of thousands of dollars. 

Todd: 15, 000 is where our personal loans or signature loans go. Yeah. Visas at 30 and. 15, 

Scott: but again, these are, these are the type of options. Like you mentioned in a high rate environment if somebody were to have a lot of say credit card debt, that may be taking out a loan like that at a lower rate than what your credit card is at, might not be a terrible way to adjust your interest rates down, make that, that pay off that, that credit card loan and then basically [00:35:00] shuffle it under a lower interest rate.

Todd: Yeah. Okay. with the high interest rates. I think going forward, moving forward, hoping that rates will come down, everyone should be hypersensitive to can I get a better rate on what I, what I currently have financed. And that's going to go, that's going to stretch from the mortgages all the way to your personal loans and your credit cards.

Even though the rates will start to come down, the lending rates will come down faster than the fed's going to lower their rates. Right. So Everyone should, should probably pay attention, know what, know what their interest rates are and any loans they have. And then pay attention regularly to where rates are headed so that you can save yourself some money.

Scott: Yeah. I know in our last episode we were talking about equity loans on existing property. And if, even if you had a great rate on your, on your mortgage, not having to refinance that, Right. Be able to take out an equity loan at that rate because that rate may, while even the mortgage rates right now don't look particularly fantastic, they're not terrible, [00:36:00] and they could very easily be better than what you're paying on a credit card if you're carrying a big balance on something like that.

So being able to turn around instead of doing, say, a summer renovation project on just swiping credit cards and maxing everything out, going and doing that loan so that you're not hitting that. big interest rate situation, being able to kind of, kind of do those looking at, at like where you can move your, your loans, your lending in those rates to kind of just better position yourself for those things.

Levi: Yeah. And rates are going to come down. It just is what it is. They will come down and don't have a timetable on that. We're not fortune tellers. But there is going to be a big refi boom of, you know, think of the last three, two or three years of all these people getting high rate loans. Yeah. They're going to want to trade them in, like Todd said, be, be conscious of interest rates and where they're heading.

If you got a 7 percent car loan and rates get down to 3 or 4%, refinance it with HAPO. You know, you can, you can [00:37:00] refinance your current loan if you have it with HAPO or GISA. with HAPO at a lower rate. So, 

Scott: yeah, I think that's something that a lot of people probably don't think about with a car loan.

Refinancing a home loan is something I think that crops up in most people's minds. But I don't think most people think about refinancing their car loans. If you're sitting at, like you said, a 7 percent and all of a sudden you can get it down to 3%, you're going to be a much happier camper at that point in time.

And again, at that point, you can probably reevaluate that, that term on that loan as well. Couldn't you? 

Levi: Yep. Yep. You can refinance the term or rewrite the term. You could rewrite it to your original term. Like if you had 31 months left of your auto loan, you could still re rewrite it at 31 months. If you want to pay it off in 31 months, it's going to say if you've targeted 

Scott: that end date as like, I'm going to be done with it at this point in time.

Levi: Yeah. And some people too, you know, if you have a big expense coming up and you don't want to spend it all on a credit card, say 15, 000, you could also refinance a car that you owe nothing on. You own it [00:38:00] free and clear and you want to take 15 grand against that car. Because rates are only 5 percent or 6%.

Well, that's better than doing it at 17 percent on a credit card, right? So yeah, there's lots of options out there. 

Scott: Well, gentlemen, it's been fantastic having you in the studio today. Before we sign off, do you have any closing sentiments, any wrap ups that you want to impart to the people listening? 

Todd: Oh, that's a tough one.

I Hellcat, if you can afford it knowing your financial situation and being educated and doing your research I personally believe we'll save people thousands and thousands, if not tens of thousands of dollars over their life. Spend the time, do the research, know your financial situation, know your credit score.

Be honest with yourself when, when you're thinking about what you can afford. And I, I think if you just stay within within Within realistic expectations, I think you'd be happy with whatever car, boat, house you buy. And then over time, I [00:39:00] think you're going to end up in a much better financial situation than if you didn't spend that time evaluating things.

Levi: Yeah, I think very similarly to Todd, to really simplify it, look at When you're borrowing money for a loan, look at your monthly payment and then what you're going to pay over the course of the entire loan. You can go online and look up a loan, auto loan calculator. I've done it a thousand times and see how much interest you're going to pay over the course of six years versus five years.

So yeah, obviously you need to make that monthly payment, but just, just be educated and versed in it's real money that you don't have to pay if you can, you know, term it differently or get it on, you know, So, 

Scott: yeah. Perfect. Well, gentlemen, thank you very much for coming in and talking consumer lending with us today.

And for everybody listening, this has been Dollars and Cents, HEPA Community Credit Union's financial literacy podcast. Till next [00:40:00] time.