How to maximize your auto loan program

While auto loans often hold a prominent share of a credit union’s overall portfolio, some credit unions make the mistake of viewing indirect financing, leasing, and direct lending as entirely separate programs.  This misconception makes it difficult for credit unions to keep up with member expectations and effectively capture auto loans. In order to maximize the number of auto loans, credit unions need to actively unify all three programs, which in turn will provide members a unique experience that exceeds expectations.

Indirect Financing

Since most auto buyers arrange their financing at the dealership, it is essential for credit unions to have a strong retail presence.  Indirect lending allows credit unions to offer a convenient method for members to finance at the dealership while creating opportunity to acquire new members.

Leasing

In 2018, over 31% of all new car purchases were leased.  This has become a popular option among consumers due to the many benefits leasing offers, such as lower monthly payments with no money down.  With the average price of a new vehicle rising close to $38,000, credit unions can gain relevancy and compete in a highly competitive space by offering consumers lower monthly payments to offset the higher price tags.  This also creates the opportunity to capture Millennials, who represent the fastest-growing market in the auto business.

Direct Lending

Direct auto lending has undergone a massive transformation in the past few years, coinciding with emerging technology and changes to auto shopping habits.  97% of all car purchases begin online, with members spending an average of 14 hours over a 4-month span researching a vehicle before visiting the dealership. Direct auto lending strategies have evolved to focus more on engaging members throughout the entire auto buying cycle.  This is accomplished by offering content that is relevant to car research ahead of rate or loan promotion. When done effectively, lenders will bridge their direct strategy with their indirect strategy and dealer network.

By unifying all three programs, credit unions can offer their members a unique experience while creating more opportunities to acquire new members.  If credit unions lack the ability to support such a strategy on their own, a strong vendor partnership is the solution. When properly managed, a partnership program will help credit unions maximize their auto loan programs.

Robert O'Hara

Robert O'Hara

Robert O’Hara, vice president of strategic alliances at GrooveCar, is a veteran of the credit union industry having worked as director of lending and operations at a Long Island ... Web: www.groovecarinc.com Details

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