PEORIA, Ill-CEFCU's Tax Smart Loan is helping the CU battle banks' auto deals below 3%.

"Our Tax Smart loan is a courtesy mortgage," explained Mary Conrady, SVP-consumer lending. "If members are a homeowner, we put a mortgage on their auto loan and they can report that interest as a tax deduction. They complete their car loan, and on the back side we have them sign a mortgage. We record it with the courthouse. Once the car loan is paid off we release the mortgage."

Conrady said CEFCU recommends that members consult with a tax advisor about the arrangement, but says its saves members enough to make the CU's 3.99% 60-month "A" credit rate equal to rates below 3%. "For someone in a 28% tax bracket, using Tax Smart can take the effective rate down to about 2.8%," Conrady said.

Despite a great deal of pressure from banks, the $4.2-billion CEFCU does not plan to lower its rates, which are risk priced. Its best rate is 3.49% for 36 months.

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