Auto Loans Driving Credit Union Growth
Credit unions have been on a roll lately. Industry profits, assets, and membership have all grown significantly since 2007, with indications that these trends will continue into the foreseeable future.
While this is welcome news for credit unions, there is still room for improvement. But where? CFI Group—a global leader in providing customer feedback insights through analytics—has worked with credit unions to answer that question.
Credit unions experienced 8.5% growth in auto loans in 2012—accounting for more than half of overall credit union lending growth last year1, with the nation’s largest credit unions leading the way in loan portfolio growth2.
Credit Union Satisfaction Index (CUSI) results reveal that 41% of respondents purchased a new vehicle within the last three years. Of these, 62% financed the vehicle and of those, 61% financed the purchase through a credit union. Distilling the math, roughly 15% of credit union members have financed a new vehicle through their credit union within the past three years. Common themes amongst member comments in the study revolved around rates, service, and trust.
The issue confronting the industry is how to continue the growth of auto loans into the future. The CUSI study shows that credit union financing for sales between private individuals (when financing is used) is quite high, exceeding 80%. The challenge presents itself at the dealership. Through this channel the CUSI results show credit union financing drops to 58%. Interestingly, though perhaps not surprising, only 15% of survey respondents recalled even being offered a credit union auto financing option through their auto dealership.
To penetrate the dealership experience, the industry has created a variety of tools to make it easier for dealers and consumers to interact with them and do business. With the use of online channels such as the Credit Union Direct Lending (www.cudl.com) solutions for credit unions and dealers (e.g., the AutoSMART online shopping site), and sites such as the Credit Union Auto Loan Network (www.cualn.com) and Autoland (www.autoland.com) for consumers, the credit union industry is actively trying to gain a bigger share of the dealership channel.
The CUSI study indicates that in the coming year, auto loan portfolios should continue to grow. For members intending to increase the relationship with their credit union, the top product cited for addition is an auto loan (31%).
Further, this interest was strongest among those in the 35-65 age range with $40K-$75K incomes. To leverage this intention, the number one thing credit unions can do is educate their members on their automotive offerings. Whether the promotion is general in nature or more targeted, based on member survey data, proactive education and outreach about credit union auto loan offerings will increase the likelihood that members will stick with their intentions when they get to the dealership and use the credit union option.
What’s Next?
CFI Group’s Credit Union Satisfaction Index (CUSI) revealed several interesting insights into member behaviors, preferences, and intentions in the auto financing segment of the industry. The full report can be found at www.cfigroup.com. For a PDF of this report, click here.
Contact CFI Group for more insights into credit union membership satisfaction or to discuss our latest Credit Union Satisfaction Index results.
What Credit Union Members Are Saying
Verbatim comments from members financing an auto purchase via credit union included:
“Better interest rates. Always try to use my credit union first.”
“We refinanced the vehicle through the credit union almost immediately after we bought the car because of the trust and security that we had in our credit union and it also offered lower interest rates.”
And from those who financed in other ways:
“Because the dealership offered financing that I was happy with.”
“They said we had to do it this way.”
