Dealer speed + member loyalty: The indirect lending equation

Auto lending is entering a new chapter, and credit unions are feeling the shift. According to the NCUA’s Q2 2025 Quarterly Data Summary, credit union auto loan balances fell by $6.5 billion year-over-year. New auto loans dropped by 3.7%, while used auto loans saw a smaller dip of 0.1%. At the same time, the cost of buying a car has reached record highs, with reports showing that the average new-car payment hit $749 per month in Q1 2025. 

Taken together, these numbers tell a story: auto lending is slowing, competition is fierce, consumers are more cautious, and credit unions have an opportunity to stand out.  

Credit unions now face a choice. Some may consider pulling back from indirect lending, protecting margin by tightening participation, and letting competitors take the volume. Others will lean in and invest in dealer relationships while prioritizing speed, transparency, and fair underwriting—not just rate.

This is not just about offering the lowest rate. Credit unions that position themselves as trusted, fast, reliable, policy-driven partners are better able to hold dealer relationships and capture first look on financing.

The winners in the next chapter of indirect auto lending will not necessarily be the ones with the cheapest rates, but those that can:

The challenge is clear: indirect lending is an incredible acquisition engine, but it does not automatically translate into long-term member value.

Data shows that fewer than 1% of indirect borrowers convert into fully engaged members. In fact, a typical credit union sees its share of wallet with these borrowers drop by about three percentage points post-funding.

In other words, credit unions are bringing in volume but often missing the opportunity to build a relationship. Why does this happen?

Indirect lending can feel transactional. Members often view the credit union simply as the financing source, not as their primary financial partner. Onboarding is slow or nonexistent. Many credit unions don’t have a structured process to welcome new borrowers, explain the value of membership, or cross-sell relevant products. Communication stops after funding. Without consistent engagement, the member’s next loan or account often goes elsewhere.

This is the “loyalty gap.” Closing it requires a strategy that balances dealer speed on the front end with member engagement on the back end.

There is no one-size-fits-all solution, but there are common building blocks credit unions can adapt to their own strategy. Think of this as a playbook rather than a checklist:

You cannot improve what you don’t measure. Start by tracking:

With this data, you can pinpoint bottlenecks and set benchmarks for improvement.

Speed is critical for dealers, but consistency is just as important. Build “safe zones” in your underwriting policies that allow for auto-decisioning  on routine deals, and streamline your exception process so credit analysts are focused only on the edge cases that truly require human review.

It’s equally important to hold dealers accountable. Lenders should define and enforce SLAs for document quality, stip delivery, and communication. The goal is to create a partnership where both sides are working toward faster, cleaner funding.

The first 90 days are critical for turning a transactional borrower into a relationship member. Develop an onboarding program that includes:

This engagement should be personalized and data-driven and include relevant offers based on the member’s profile and financial behavior.

Technology is the backbone of a modern indirect lending strategy. When implemented thoughtfully, it can transform indirect lending from a transactional channel into a sustainable growth engine—strengthening dealer relationships, improving efficiency, and deepening member engagement.

The most effective indirect lending platforms help credit unions move from application to approval in seconds, while maintaining consistent, policy-driven underwriting. Automated decisioning and built-in exception handling keep deals moving quickly, and real-time status updates give dealers the transparency and confidence they need to prioritize your institution as their “first look” lender.

The right technology doesn’t stop at funding—it extends into relationship-building. Marketing automation and CRM integrations enable credit unions to reach new borrowers with personalized onboarding, educational content, and timely cross-sell offers. This kind of proactive engagement helps turn a one-time borrower into a loyal, multi-product member.

Comprehensive data analytics tools bring clarity to portfolio performance. Dashboards and real-time reporting can highlight where decisions slow down, how quickly funding happens, and how members engage post-loan. With these insights, credit unions can identify trends early, refine dealer strategies, and continually optimize lending operations.

There’s no single path to indirect lending success, but there is a powerful balance to strike. While credit union auto lending has softened industry-wide, MeridianLink customer data shows auto loan volumes up more than 10% year over year in 2025. The message is clear: with the right digital infrastructure and member-first approach, meaningful growth isn’t just possible—it’s already happening.

The credit unions leading the next chapter of auto lending are those that combine dealer speed with member loyalty, turning every funded deal into the start of a lasting relationship.

The credit unions best positioned to achieve that will:

For a deeper look at the strategies and technology fueling this growth, visit https://www.meridianlink.com/

The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding the indirect lending content herein. The opinions expressed in this article are the opinions of the individual authors and may not reflect the opinions of MeridianLink, Inc.