The auto lending industry is facing numerous challenges, from market fluctuations to changing consumer preferences.
Dealers are navigating a perfect storm of decreasing yet still high vehicle prices, stable but elevated interest rates, and rising consumer insurance premiums—all of which impact whether buyers can purchase a new vehicle. The supply of used vehicles has improved somewhat, but it remains a challenge, partly due to fewer leased vehicles returning to dealerships. As a result, consumers across the credit spectrum are searching for the best loan rates and terms to drive down monthly payments.
At the same time, lenders continue to need auto loan growth, and indirect lending has been the staple for decades. In this constantly evolving environment, the partnership between credit unions and auto dealers becomes even more essential to continue growth.
The importance of partnerships
As dealers look to move quickly to satisfy buyer demands, the opportunity becomes how to be their prioritized lender. Dealers have hundreds of lenders to choose from for every deal, and that’s where partner relationships become essential.
What has always made credit unions so different from other lenders is how they approach partnerships. While great rates and terms help credit unions better serve the community, the ‘people helping people’ mantra is beneficial with dealers, too. The relationship created with the dealer and how the credit union serves them solidifies the credit union as a priority partner; reliability seals the deal.
Dealers offer tips for credit unions
With dealers' shifting needs, the purchase experience evolving, and credit unions seeking growth opportunities, partnerships are the path to mutual success. Our auto dealer friends provided a few tips for credit unions who want to be prioritized as lender partners.
- Be flexible: Dealers are looking for lender partners who show flexibility and make loan decisions that benefit their customers, especially in terms of affordability. Credit unions are finding creative ways to do this by looking at every opportunity to say yes to a deal. Credit unions are stretching themselves to help members and the community, and dealers have taken notice.
- Invest in technology and prioritize efficiency: Lenders should invest in technology to improve operational efficiencies and fund loans faster. Implementing AI and automation can speed processing, approvals, and fundings, ultimately lowering costs and increasing the bottom line—but also funding loans faster. Moving inventory is the dealer's priority and helping them do it quickly makes you a top lender.
- Nurture relationships: Relationships are built on trust. Good lenders prioritize service, but great lenders know their dealer partners and prioritize relationship building. Dealers are seeking partners who communicate with them, are reliable, and available. Dealers are hungry to know how they are performing as business partners, so regularly share a dealer scorecard with dealership management. This is where the ‘people helping people’ mantra is a game changer for credit unions. With a culture of service and specializing in a human-centric approach to financing, credit unions disrupt the lending experience. Credit unions only need to apply their commitment to members to dealers as well.
The changes in today's auto market demand have emphasized the need for stronger partner relationships between credit unions and auto dealers. Collaboration benefits auto dealers and credit unions for an improved bottom line but also ensures that consumers have access to the best loan rates and terms, ultimately making vehicle ownership more accessible. As the auto lending landscape continues to evolve, the strength of these partnerships will be key to navigating the challenges and seizing the opportunities that lie ahead.
