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Are You Making The Correct Advances On Each Auto Loan?

Once upon a time, auto financing was easy. With the right approach and the right information, it can be again.

Ten years ago, vehicle values were relatively stable and advancing a consumer loan was based simply on the dealer’s knowledge and reporting of the vehicle. Market values based on complex formulas,mileage and option adjustments, vehicle conditions, and histories didn’t play into the financing decision.

The events of 2008 changed all that. Advances could no longer be based on the dealers’ or consumers’ word. Vehicle values began to swing greatly, dependent on fuel costs, economic conditions,and consumer preferences. Environmental issues such as the Japanese tsunami have decreased inventory levels, dropping from 40% US market share early last year to less than a 35% share by year’s end.

Kelley Blue Book analysts have found that consumer confidence and unemployment data are highly correlated to new-vehicle sales. Although sales have improved from 2009 and 2010, sales in excess of 13-million units per year are not anticipated untilhousing and unemployment rates improve considerably. Meanwhile, Kelley Blue Book has observed that used vehicle values have steadily increased during these uncertain economic times.

A Used Car Is Worth More Than In Years Past
Average Value Of A Three-Year-Old Used Vehicle In October

According to new market data, the price of a used vehicle is expected to increase nearly 2% this year ? after a 3% increase in 2011. The main reason for this is that during the recession, auto manufacturers slowed their production lines, so by 2010 therewere simply fewer used cars on the market. Additionally, the struggling jobsmarket and economic uncertainty have made people hang onto their cars longer. Now that the economy hasturned around, these people will be looking to trade-in their used vehicles like never before. It will be important to have the most market reflective values to help facilitate these transactions and get your fair share of this expanded market.

Vehicle values today are based on millions of transactions, thousands of vehicle configurations, and the work of analysts and statisticians. Many institutions have neither the time nor the resources to devote to these efforts and instead choose to relyon a reliable, trustworthy third-party source from which to receive this information.

Credit unions should look to gain reports from this relationship that contain information like the vehicle year, make, model, a vehicle description and options along with the current values based on the vehicle’s condition (At KBB, condition iscategorized as Excellent, Very Good, Good, and Fair). You should also have anytime, immediate access to all industry values. Kelley Blue Book values include suggested retail, certified pre-owned, lending, auction, and trade-in, providing an eagle-eye view of the overall valuation picture.

If the vehicle is accessed by VIN, the matching vehicle as well as standard equipment should be pre-populated. Credit unions should simply need to add mileage and additional equipment to get the up-to-date vehicle value, without user licenses and withpricing scales that are based on your personal usage.

For over 85 years, Kelley Blue Book has been The Trusted Resource for many credit unions to help them make sound lending decisions. Weekly updated, market reflective vehicle values can be availablein less than a minute using Kelley Blue Book’s new online web-based vehicle financing toolQuick Values.

Kelley Blue Book also offers a monthly Blue Book Market Report, available for download here. Published by Kelley Blue Book’s Analytic Insights team,this free e-newsletter explores the state of the automotive industry by analyzing Kelley Blue Book Auction Values and discusses developments in residual values on a bi-monthly basis.

Founded in 1926, Kelley Blue Book, The Trusted Resource, is the only vehicle valuation and information source trusted and relied upon by both consumers and the industry. Kelley Blue Book Co. Inc. is a wholly owned subsidiary of AutoTrader.com.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
May 15, 2014

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