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Developing Profitable Auto Loan Growth

Expanding liquidity and the low cost of funds is driving auto finance competition from traditional lenders.

A competitive auto finance environment has made it increasingly difficult for credit unions to maintain and grow auto loan portfolios, with new car loans beinga particular challenge. With the appeal of seemingly low-cost options like 0.00% APR financing, no-money-down offers, rebates and other incentives, member auto loan opportunities are continually at risk of being lost to traditional finance groups.Demonstrating that a member’s financial interests are best served with credit union financing is an uphill battle. Members frequently don’t understand the added and unforeseencosts often included in attractive finance offers before they’ve committed to paying them.

To compete for greater auto loan market share, credit unions must enrich the value of member service relationships. A multi-channel marketing strategy is essential to promote the value of credit unionloan programs to in-market members. In addition to traditional retail, online, and direct member marketing, campaigns should include educational components like car buying seminars (hosted onsite or online) to educate members on the true costs ofdealer financing options and negotiating tactics. Convenient mobile banking solutions with integrated message delivery and social networking are new media strategies that many creditunions can successfully utilize to drive loan volume. Communication through social platforms is a means to strengthen member relationships and affirm credit union core values byraising awareness of the institution’s community involvement, service announcements, member satisfaction ratings, and product offerings.

Now more than ever, consumers want to feel confident in their purchase decisions. A 2012 survey from CarFinance.com reported that 62% of car buyers rated negotiating the vehicle’s sale price as the worst aspect of purchasing a car. Most consumersshopping with a dealer lack the confidence that they’ll receive a good deal in the final negotiation. By offering members a value driven car buying experience as well as competitive auto finance products, credit unions can differentiate themselvesas a trusted car buying resource, and eliminate member exposure to the dealer or another lender where the financing opportunity is at risk.

Autoland is a credit union centric organization that for more than forty years has operated as a direct auto loan delivery channel for partners by providing a premier auto buying experience to their members. North Island Credit Union ($1B, San Diego, CA) partnered with Autoland in 2011 to grow direct auto loans. The response from membership has been excellent and as the relationship has matured, results have continued to be extremely positive with the credit union enjoyinga loan retention rate of 86% in 2012.

In late 2011, North Island Credit Union changed its consumer lending strategy to provide what we call storybook lending, where we ensure that we gain an understanding of how our members fared during the economic downturn,says Jeff Stone, executive vice president and chief credit officer.

We were already partnering with Autoland before we made this change and since the switch, they have become even more of a strategic partner, increasing the monthly volume of loans that they drive to the credit union seven fold. In short,Autoland has been a big contributor to our success.

For more information on implementing Autoland’s turnkey service that provides an unmatched auto buying experience to members and profitable auto loan growth to credit unions, please contact: Marcia Francisco, SVP of Marketing and Business Development at 818.885.4427 or mfrancisco@autoland.com

Autoland is the nation’s premier car buying service for members of Credit Unions. Founded in 1971 with the belief that people deserve a better car buying experience, Autoland has provided hundreds of thousands of satisfied drivers with a convenient and hassle-free means to purchase a vehicle at a great value through their Credit Union.

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.
June 4, 2014

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