Making loans on autos more automatic
Posted by Mr. Bob Rehm, CUDE, VP Sales and Service, Credit Union Resources, Inc on 6/12/2017

Some car industry analysts are beginning to believe that annual auto sales will decline in 2017 for the first time since 2009. 

In an article in Bloomberg on June 8, Morgan Stanley warned of an "unprecedented buyer’s strike," and lowered its U.S. auto sales forecast by millions of units for each year through 2020. Their auto analyst, Adam Jonas, expects the 2017 U.S. annualized automotive sales rate, adjusted for seasonal trends, to reach 17.3 million, down from a prior expectation of 18.3 million.

According to the Bloomberg article, Jonas’s estimated cuts for the years 2018 to 2020 are more substantial, indicative of a broader slump. Morgan Stanley now expects 2018 sales of 16.4 million units, compared to 18.9 million previously, with the rate slowing to 15 million in 2019 and 2020, reflecting the possibility of further decline in used-car prices due to technological obsolescence.

Credit union strategic planners are also pondering the possible impact of self-driving cars and ride sharing services that might reduce the demand for personal vehicle ownership. Much has been written about the impact to sales of these trends in personal transportation, but it may be too soon to see if those will actually affect auto sales and thereby auto loans.

So, if the pond where we fish for auto loans is shrinking, what does that mean to credit unions?

Credit unions may have to find new ways to put auto loans on their books.  Competition from Fintech lenders, big bank marketing, dealer financing offers could make a shrinking market an even more difficult place to grow a loan portfolio. 

But there are answers. Innovative and effective approaches to growing loan portfolios are offered today by Credit Union Resources’ partner companies.

Get ‘em when they are shopping

Triggers from credit inquiries are a proactive way the credit union can be “in the game” when the member is shopping for a vehicle.  The credit inquiry trigger allows the credit union to intercept the buying transaction and get the loan before a competitor does.  Statistics show that 60 percent of shoppers commit to a purchase within one week of the credit inquiry.

Narrow the marketing focus

Data-driven marketing drives higher conversion rates and more effective use of credit union marketing dollars.  The credit union can use predictive analytics to determine a target audience for marketing loan offers, instead of mass mailing the membership or potential members.  For example, the target could be members whose auto loans are approaching payoff – because they’re most likely to be buying a new vehicle very soon. The credit union chooses the pre-approval rules that go into a targeted, personalized communication to the member via mail or email.  The objective is to get members to secure financing with the credit union – even before they start car shopping.

Loan recapture

What about when the loan has already been made?  Go get it! 

A credit prescreen process identifies members or potential members who have acceptable credit, as defined by the credit union, and recently financed a vehicle somewhere other than the credit union. Members meeting prescreen criteria receive pre-qualified offers via mail or email to refinance their loan with the credit union.

Where to start

Credit Union Resources’ Preferred Business Alliance partners, SERTech and CUNA Mutual Group, offer programs, such as the ones described above, to help credit unions compete for their members’ loans.  Contact me if you would like more information!

Categories: Business Partners
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