New Car? You’ve Got Loan Term Options


Consumers' podcast graphic with image of guest Tim Kosak

Just like everything else, the cost of cars is increasing. Tune in to this episode of Money, I’m Home as Lynne is joined by Consumers Vice President of Lending Tim Kosak to learn about the current vehicle market and Consumers’ new 96-month auto loan.


0:00:06.5 Lynne Jarman-Johnson (LJJ): Money, I’m home, welcome, and I’m Lynne Jarman-Johnson with Consumers Credit Union from finance to fitness, we have it all. I’ll tell you, we love talking with our expert team to help you, and today that’s exactly what we’re doing. Tim Kosak is with us, he is our Vice President of Lending, he is an amazing gentleman, and not only is he a professional, Tim, you’ve been with Consumers for many years, and I’m not calling old all by the way.

0:00:31.9 Tim Kosak: I am cresting my 26th year this month, as a matter of fact.

0:00:36.5 LJJ: Yeah, you must have started when you were 10?

0:00:38.6 TK: Right.


0:00:41.7 LJJ: Tell us a little bit about your journey, will you? Because you are one of the very first people that helped me along my own financial journey, everybody has them, I love the way that you’re always looking at any situation in a positive light, you’ve been just a gem for Consumers, for sure.

0:00:58.6 TK: Aw, thank you, Lynne. Yeah, that’s been one of the passions that really has driven me and really shaped my career, I started out at our offices, actually started as a teller with Consumers Credit Union years ago, and worked in the offices for many, many years, and that’s what really drove my passion, finding out how members could thrive through better lending and being able to provide better service and really try and find something with the member, and honestly, the members, they’ve really been my best teaching tool.

0:01:27.7 LJJ: Well, you see something new every day, I know Kristy, is our fraud specialist that comes on once a month, and she’s always very open, private about our members privacy and security, but very open about what things are going on out there, and in lending, it’s the same, there’s so many changes, especially lately. You know the ups and downs that have been happening. Today, if you don’t mind, I’d really like to kind of focus on automobiles because I love the way that Steve Owens, our Chief Lending Officer says, that we love to help you with the car you drive, the home you live in, the business that you run, and the car you drive, I cannot get over how different the landscape is, just looking at the fact that people saying, “I can’t get a car. I really want a car, but I can’t.” And did that seem to happen with COVID?

0:02:19.4 TK: COVID really had an interesting impact, you had a lot of folks that were struggling with time out of work, changes in their environment and where they’re working and how they’re working, and a lot of folks have moved and now working from home, and some of them need a vehicle less, some of them needed it more, so you really saw the full gambit of it, but what was clear is, is also there was a tremendous amount of stimulus in the economy that did help folks and actually spurred on a lot of the vehicle purchases because of the down payment opportunities.

0:02:47.6 LJJ: And so when you look at vehicle purchases, have you seen on the consumers end that there’s been a higher demand, or have you seen that push back where you hear the news stories about, well, there is supply issues, everyone’s changing to electric, what am I supposed to do?

0:03:03.2 TK: Yep. And like the population, we’ve seen everything, the supply challenges really drove some of the availability of vehicles and made it more difficult, but also had an impact on supply and demand and the desire for vehicles, dealers actually have been doing quite well, having limited inventory, scarcity spurring even further demand.

0:03:25.7 LJJ: So, when you look at deciding to buy a car, I have a car I love, I absolutely love, but you know, it’s getting a little bit out up there in age, and so I had some fun looking in online the other day and about… My jaw dropped because I just… I was just so surprised at how expensive they are.

0:03:43.6 TK: Yes, vehicles have definitely increased, just in the past 18 months, our average vehicle that we have financed at Consumers, which includes the high-end vehicles to the everyday vehicles, the get-me-by vehicles or the starter vehicles, we’ve seen that increase from an average of about $23,000 per vehicle, upwards of $31,000 per vehicle. So that gives you an indication. Now that’s a little bit of a shift to some new vehicles as well, but that does give you an indication that vehicles are becoming more expensive, both the used and the new, we are finally starting to see that used vehicle crest, those vehicles are not continuing to go up, there is a little bit of a relief in that area, but definitely vehicles are much more expensive than they have been in the past.

0:04:28.0 LJJ: It sounds like the house you’re going to buy too. Does it?


0:04:33.9 TK: Yeah, we are seeing some parallel trends right there.

0:04:35.9 LJJ: So Tim, you know Consumers, we have wonderful opportunities for people who want to get into that dream car or your first car, tell us a little bit about what people need to think about when it’s time for them to get that loan.

0:04:49.8 TK: Absolutely. Always, you’re going to be focusing on what’s the need of the vehicle. There are some questions about electric vehicles, do I need to commute? Will the vehicle get me where I need to be? Do we like to travel? A lot of families have two vehicles in the household. You might be having one for commuting and one for the family trip, so definitely focusing on the need. Obviously, hopefully also focusing on what you can afford and finance. One of my favorite, favorite questions for members is, ‘What do you want to do after the vehicle purchase?’ And you can think about that in terms of a house. I’ve seen members and really consider sometimes looking at vehicles that possibly might prevent them from being able to buy the next vehicle, so definitely want is always part of the equation. We definitely want to drive that vehicle that represents us and that we enjoy driving, but it is a balance between what’s the function of the vehicle, what’s the affordability of the vehicle, and also your next purchase.

0:05:51.2 LJJ: So Tim, one of the things you just talked about is the expense going up on those cars, which sometimes could mean a longer term on your loan, now, is that good for everybody? I think we’ve got a brand-new product for that?

0:06:03.5 TK: We do. Consumers is just introducing a 96-month vehicle term, that term does come with some caveats in terms of the type of vehicle, the design for larger vehicles, and really the question is, is why are you using the car? 96 months or any vehicle term is a financial tool, and so what we really encourage our members to figure out is what is their financial plan. I’ll give you a really quick example. Somebody that drives a lot for a living or commutes great distances would really want to think really carefully about the term of their vehicle and probably are going to have a constrain term, something shorter, to make sure that the vehicle lasts longer than the term of the vehicle. So we don’t want our members to get trapped in a vehicle where the vehicle depreciates quicker than the actual loan does, and that’s what a 96-month term will do, it empowers our members the flexibility to pay lower for certain particular reasons. For example, somebody may be growing into a larger income, somebody that’s in the beginning of their career and has the ability to accelerate their payment over time, that might be a good financial tool for that person.

0:07:17.7 LJJ: Well, and I love the fact that you say, “Hey, look at your entire life and what are your goals,” because a car is a big chunk of that now, isn’t it?

0:07:25.6 TK: It is, and you don’t want a 96-month term to surprise you at the end, that’s what it’s all about. It’s the planning process, work with your Consumers professional to try and design something that’s going to fit your financial needs and target your long-term financial goals.

0:07:43.2 LJJ: And we have so many ways that you can find out what’s the best for you. How is it if we really want a loan for a car, there’s multiple ways, including our wonderful dealers, our indirect dealers, so… Well, we call them indirect dealers, they’re your car dealer, who can help you with getting financing.

0:08:03.3 TK: Yep, we have over 160 really professional dealer partners in the Michigan area. We’d love to set you up with them. They’re all listed on our website. We also have a product called AutoSMART on our website that helps you compare vehicles, compare vehicle values, and help really shop for the right vehicle for you, and then, of course, our staff that really go through these questions at length with you to try and determine what is the right vehicle, what is the right product, what is the right term, that’s going to fit your financial needs and make sure that you’re successful long-term.

0:08:33.8 LJJ: And Tim, I love it because you know more than anyone… You mentioned it earlier, and I think it’s so spot on. A car really is you, it’s what your style is at that particular moment and where you want to go, so sometimes the question of want becomes, “Okay, I want that.”

0:08:51.1 TK: Yeah.

0:08:51.8 LJJ: Well, Tim, thank you so much for joining us today. And we sure appreciate your time and your talents.

0:08:58.3 TK: Thank you, Lynne, it’s been enjoyable.

0:09:00.8 LJJ: I’ll tell you what, if you do want to get that car, go to consumerscu.org, and you can search for that car on that AutoSMART page, but to also find out who our partners are that can help you walk into an office, pick up the phone, we’re here for you. Hi, I’m Lynne Jarman-Johnson with Consumers Credit Union. Thank you, Jake Esselink, for your production skills and if you have a topic, just send it our way. Money, I’m home, with Consumers Credit Union.


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