One Way to Strengthen Your Auto Loan Portfolio
September 14, 2021
With the auto loan business booming, credit unions everywhere are strategizing how to stand out from the crowd of lenders to increase loan volume, earn a greater ROI on each loan, and attract new borrowers.
An easy way to achieve this, according to Strategic Link partner Auto Financial Group (AFG), is to offer residual based financing.
Experian’s Q2 2021 State of the Automotive Finance Market Report indicated that roughly 30% of all new car purchases use some form of residual based financing. But it’s not just new vehicle residual-based loans that are on the rise. Used and certified pre-owned vehicles have become an attractive option for consumers looking to lower their monthly payments and shorten their loan terms.
AFG provides residual based financing on new, used, and certified pre-owned vehicles, which can save borrowers between 30% and 50%, keeps their loan terms within 24-72 months, and enables them to take actual ownership of the vehicle (the vehicle is titled in the consumer’s name). Borrowers can trade, sell, or refinance the loan without any early payment penalty during the loan term. And they also have the option to surrender the vehicle at the end of the term and walk away.
Leveraging a solution like AFG’s, credit unions can differentiate themselves from other, less attractive financing options, like captive lenders, and the solution can be offered through their direct-borrower-facing or indirect dealer channels. Data shows credit unions that offer alternative lending options see an increase in the number of loans they originate, leading to sustained growth down the road.
Want to learn more about how residual based financing can help your credit union thrive and save your members money? Join AFG and Strategic Link for an informative webinar diving into this very topic on Sept. 30. Register online today.
AFG has provided financial institutions with innovative, revenue-producing products for over two decades. Visit the partner online or contact the Strategic Link team for more information. During the 2021 MAXX Strategic Link Trade Show in Boise Oct. 5-7, you can connect directly with the AFG team at booth #50.