How cross-selling can maximize your auto lending

If your credit union doesn’t already take advantage of tax season to rev up auto loan promotions, now is a good time to start. According to the IRS, so far, the average tax refund is $3,034, a 3% increase from this time last year. In addition, in 2014 car sales rose between January and February, peaking around May for most manufacturers, according to Edmunds. If your members are in the market for new wheels and have an influx of extra cash, chances are they will turn to you for their auto lending needs.

Running a targeted auto lending campaign during tax season is a smart move that could potentially result in increased loans on the books, but you don’t have to stop there! While interest income is typically a big goal for our financial institution clients, additional fee income—combined with the opportunity to increase member loyalty—should be a close second. Cross-selling to your current members should give your sales staff an advantage—those clients have already placed their​ trust in your institution, so they are an obvious market for cross-selling point of sale or complimentary insurance products. We’ve identified three reasons why we believe cross-selling can not only maximize your auto lending strategy, but could potentially be key in the future of your credit union’s success:

Increased Member Loyalty

In a time when the field of competition in the financial service provider arena is fierce—large banks and institutions, pay day lenders, community banks, and even insurance companies—credit unions are in a position where offering a low rate is no longer enough to keep their members. Consumers are looking for true value in their financial service provider. Providing your members with not only a low rate auto loan, but also the option to add products that can protect and insure their auto investment, can save them thousands in the event of a mechanical breakdown, make payments on their loan in the event of a disability or job loss, and much more. You’d be surprised to find out how many consumers don’t know that there could be a shortfall between their insurance payout and their loan in the event of an auto accident.

When a tragedy such as an accident occurs, the last thing your member wants to hear is that they still owe thousands of dollars on a vehicle that they can no longer drive. If, instead, you are the bearer of good news—informing them that thanks to the GAP with PowerBuy policy that they purchased from you when they closed on their loan, they not only have their balance paid in full, but also have funds for a down payment on a new vehicle—your credit union will be the hero. These kind of positive interactions lead directly to increased member loyalty.

Increased Fee Income

As I mentioned earlier, the majority of our clients’ bread and butter most assuredly comes from interest income. However, when providing your members with the option to purchase vehicle protection products that can protect their investment–and in some cases their livelihood–and earn fee income as a byproduct, well, it’s a win-win for everyone. Cross-selling a complimentary insurance or vehicle protection product at the close of every loan will lead to increased fee income and perhaps help keep rates lower for your members, making your auto loan offering more competitive. Not every member will take advantage of the benefits of one (or more) of these products, but some will, and the more well-versed and confident your sales staff gets at selling the advantages of purchasing from you—their trusted financial partner—the higher sales will be, resulting in even more fee income on top of your anticipated auto interest income.

Improved Service

Improving member services goes hand-in-hand with increasing member loyalty. Depending on the culture of your credit union, “selling” or “pushing” products at members may not seem like a way to improve service, but I’d argue that it’s time for a new school of thought. Consider your role as a financial educator and think of it this way: how many of your members would lose their job if their vehicle was totaled and they couldn’t afford to get a new one to back and forth from work? How many of your members might be paying hundreds of dollars more for auto insurance because they didn’t have the option to work with an agent that could shop carriers on their behalf? How many of your members could lose their vehicle and have their credit score ruined if they lost their job or became disabled and could no longer make their vehicle payment? Providing your members with the option to invest in products that could potentially save them from a financial disaster is the epitome of great service.

If you’re looking for a way to maximize your auto lending and increase member loyalty, check out GAP with PowerBuy™, the newest GAP product on the market. As the exclusive provider, we give you the ability to provide your members with a product that can not only pay off the balance of their auto loan in the event of a total loss, but also give them up to $5,000 to finance their next vehicle with your credit union. Click here to learn more about GAP with PowerBuy!