Auto Buying Is Evolving Rapidly—Are You?

by Pierre Cardenas

Today’s credit unions have access to deposits that are cheaper than ever before. So why isn’t it easier to make money from these low-cost deposits? Most credit unions are finding it harder—not easier—to get these funds into the hands of borrowers, instead of the alternative, low-yielding investments.

While a few credit unions have figured it out, most are still fighting hard for loan business.

Traditionally, the “bread and butter” for credit unions has been auto lending, but times have changed. Credit unions have to work harder to capture their share of the auto loan market, with the majority of loan volume typically coming from the indirect channel.

How do the smaller credit unions—6,000 of which are under $100 million in assets—get  their share?

Auto Buying Is Evolving Rapidly

Several trends are changing, as credit unions struggle to define their direct auto lending strategies. First, consumers are buying more cars online. Not surprisingly, a 2011 Cap Gemini study reported consumers’ comfort level with buying a car online has grown dramatically over the last 10 years. In addition, according to a 2011 Manheim report, 30 percent of members will buy a car from a private seller—not a dealer. Contrary to popular belief, Craigslist has the vast majority of the private sale listings online. This peer-to-peer environment is much larger than you might think. More than 11 million vehicles are sold in a peer-to-peer transaction each year in the U.S.

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