Developing Profitable Auto Loan Growth

Challenge

A competitive auto finance environment has made it increasingly difficult for credit unions to maintain and grow auto loan portfolios, with new car loans being a particular challenge. With the appeal of 0-percent APR financing, no-money-down offers and other incentives, member auto loan opportunities are continually at risk of being lost to dealer financing.

Institutions are tasked with reducing this risk by enriching the value of the credit union relationship for members. Demonstrating that a member’s financial interests are best served at the credit union is an uphill battle—members frequently don’t understanding the added and unforeseen costs often included in “attractive” dealer finance offers before they’ve already committed to paying them.

Solution

By offering members a value driven car buying experience as well as competitive auto finance products, credit unions can differentiate themselves as a trusted car buying resource, and eliminate member exposure to the dealer or another financial institution where the financing is at risk. A strategic partnership with Autoland is just the means to do this. In essence, Autoland operates as a concierge auto buying service for members and a direct auto loan delivery channel for credit unions. Through this partnership, credit unions can leverage the industry’s largest auto buying service, which includes a multi-state dealer inventory network, to generate quality direct loans, and provide a great auto buying experience to members.

Autoland is a credit union-centric organization with more than 40 years of experience delivering quality auto loans to credit unions by delivering cars to their members. This turnkey service can be implemented quickly with executive and member services staff ready to support the credit union relationship to profitability.

Autoland provides each of its partners with in-market or in-house consultants to service the auto buying needs of its members before they shop with a dealer. The Autoland consultant is a “micro” dealer handling all facets of the transaction: trades, after-market products—really everything except mechanically service the vehicle. The consultant starts by gathering information on the member’s vehicle requirements, or the member can configure their new car online at www.autoland.com. Regardless of how the member chooses to shop, the consultant locates the selected vehicle in the partner inventory network, negotiates the final vehicle price, facilitates the trade in, secures all available rebates and incentives, and coordinates member financing with the credit union. Lastly, the consultant schedules delivery of the car at a convenient location for the member (typically the credit union branch). For the Credit Union, the average loan retention rate is over 80 percent, and for Autoland, the average member satisfaction score is 98 percent.
 

Average member satisfaction scores of key service factors: Consultant Availability

Vehicle Knowledge

Promptness/ Delivery

Professionalism

Vehicle Appearance at Delivery

Likeliness to Refer

97%

98%

98%

98%

98%

98%

Members utilizing the Autoland service report an average savings of $2,343 on their car purchase. These results highlight Autoland’s ability to provide members with a fair price on their new car (fees are transparent) and an outstanding overall auto buying experience, while the credit union garners the financing, and increased member loyalty.

Results Case-Study

Seattle Metropolitan Credit Union partnered with Autoland in the first quarter of 2012 to grow quality direct loans. To ensure outstanding results, Autoland’s proven best-practice strategy and tactics were implemented by the credit union. The year-to-date response from the membership and referrals from staff have been excellent. As the relationship has matured, the results have been positive in a relatively short period of time—with the credit union enjoying a loan retention rate of 89 percent. Additional in-market consultants are being assigned to Seattle Metropolitan Credit Union offices in order to meet the growing car buying demands of its members.

“The Autoland partnership has allowed Seattle Metropolitan Credit Union to increase our number of auto loans that would have otherwise been lost to other lenders. Their expertise has not only resulted in many happy members, it has also assisted us with direct auto growth.”

– Lee Pierce, Assistant Vice President of Lending Lending, Seattle Metropolitan Credit Union

Keys to Making It Work

The first step for new partners is to implement and maintain Autoland’s best practices, which include establishment of an annual loan goal tied to Autoland sales. A commitment at all levels of the credit union organization to work collaboratively with Autoland is essential to meeting strategy objectives. Utilizing the complete service infrastructure, best-of-breed technology, and marketing resources available to the partnership is also key. Partners that work closely with Autoland to monitor results and modify strategies, see the highest rates of success in meeting their loan and member service objectives.

Lessons Learned

Now more than ever, consumers want to feel confident in their purchase decisions. An August 2012 survey conducted by CarFinance.com reported that 62 percent of car buyers rated negotiating the vehicle sales price as the worst aspect of purchasing a car. Most consumers shopping with a dealer lack the confidence that they’ll receive a good deal in the final negotiation. These consumers are your members—they trust in the value of the financial products your credit union provides—given the option of the Autoland service, they’ll also trust in your credit union to purchase and finance their next vehicle. Put your members’ auto buying experience in the hands of Autoland, and your credit union will see positive growth in its direct auto loan business.

“Autoland provides our members with an easy and convenient way to purchase their next car in a no pressure environment. Members love the personal concierge type service Autoland provides in assisting them with finding their car, and at a reasonable price.”

– Lee Pierce, Assistant Vice President of Lending Lending, Seattle Metropolitan Credit Union

 

Strategic Link is the NWCUAs wholly-owned service corporation, providing the Associations member credit unions with exclusive high-quality, competitively-priced products and discounted services. To learn more about how the Association’s partnership with Autoland can benefit your credit union, contact Sales and Marketing Associate Craig Reed: 206.340.4789, creed@nwcua.org.

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