How One Device Can Help Grow Your Credit Union’s Auto Loan Volume

As a credit union, you know that auto loan volume can be a bit like a rollercoaster with plenty of ups and downs. Right now, according to Experian, auto loans are on an upswing at $371 billion, which is a 64% increase since 2009. Hand-in-hand with this increase is a boost in subprime auto loans which have a more sizable growth of 93% since 2009. Subprime loans now account for 20% to 30% of all auto loans since 2000.

The good news is that auto loan volume is up – which is always welcome news. Unfortunately, there’s a flipside to these figures, delinquencies. Naturally, when auto loan volume rises, so do delinquencies. According to Standard & Poor’s, over 3% of loans are at least 60 days in arrears. That’s a 1% increase from 2011. While credit unions may not play a large part in the subprime financing, there are still many good opportunities in near or non-prime loans.

This leaves credit unions with a challenge – how do you manage this auto loan volume increase, especially non- and subprime loans, without increasing your loan risk or collections efforts? A GPS-based device from Spireon called LoanPlus CMS holds the answer.

How it Works 

With LoanPlus CMS, your credit union will be able to have a small electronic device called a Remote Collateral Management Unit installed on each vehicle. To recover a vehicle, the system not only lets a credit union locate a vehicle but an additional option allows you to remotely disable the vehicle as well.  However, LoanPlus CMS is not just a repossession tool, it allows credit unions to help more members.   By providing more loans in this area, credit unions can truly help members with damaged credit histories to restore their credit rating and securing better interest rates in the future.

How it Helps

LoanPlus CMS is a turnkey collateral management solution that combines global positioning system (GPS), Mobile Resource Management (MRM) and Software-as-a-Service (SaaS) technology to help your credit union:

• Improve Payment Behavior and Decrease Delinquencies – A good strong closing and the installation of the GPS unit will provide members an extra incentive to make their payments on a timely basis. If that’s not enough, the credit union can have a reminder buzzer sound every time the car is started and the payment is past due. And, yes, with the GPS units you can also easily locate a vehicle if it comes to repossession. This is a great advantage for the credit union but it also provides tools and incentives for the member to improve their payment behavior and credit rating. 
• Attract and Retain More Members – We know you have members that have been with your credit union for years because when they needed an auto loan, your credit union was the only place that would help. LoanPlus CMS is a great platform to build on that history. Maybe it allows you to buy a little deeper and serve more new or existing members. Maybe it’s a key component of a “First Time Car Buyer Program” for members with little or no credit history. Or maybe it allows you to finance a few more loans from your local dealers and expand your relationships there.
• Significant Member Savings – Credit unions are more likely to offer rates far better than other providers, saving thousands on interest and avoiding other costly fees associated with subprime lenders. Plus, if the vehicle is stolen, the credit union will be able to work with the police to locate and recover it.
•  Maximize Your Resources – You can integrate LoanPlus CMS with your current portfolio management system and use its customizable reporting to improve efficiencies and productivity. 

Positive Results

The National Alliance of Buy Here, Pay Here Dealers (NABD) conducted a survey of collateral management system (CMS) users in 2011 and found that collection departments saved $300 to $750 per repossession when using a CMS. Dealers who used a CMS were also able to reduce delinquency rates by 10%. Using a CMS also prompted borrowers to interact more often with the lender with inbound calls growing from 400-500 per day to 500-700 per day. The CMS users also revealed that having the ability to change their borrower’s behavior was the greatest benefit of using the product. 

To learn more or sign up for a free webinar click here, call 800.262.6285 or email info@cusolutionsgroup.com. 

Protecting Your Credit Union's Auto Loan Collateral

Credit unions face many challenges when it comes to growing auto loan volume – especially contending with loan delinquencies and repossessions. According to Experian Automotive’s State of the Automotive Finance Market report released recently, there’s both good and bad news for lenders.

Both vehicle repossessions and delinquencies for finance companies are up 1.23 percent to a rate of 2.84 percent for the last quarter of 2013. This is the highest rate recorded since Experian started tracking the date in 2006. Also, the average charge-off amount for auto loans gone bad increased from $7,277 in Q4 2012 to $8,520 a year later.

Want some positive news? Auto loan balances were at an all-time high since Experian first started reporting the data eight years ago. Auto loan balances are at$782.9 billion, up $103 billion from the third quarter 2012.

While finance companies tend to be the hardest hit with delinquencies, credit unions and other financial institutions also feel the impact. Auto lenders have to do extensive research to analyze and understand the risk in each and every loan. And if the loan becomes delinquent and repossession is necessary, it can sometimes take a while to locate the vehicle in question.

Connecting Technology to Auto Loan Collateral

CU Solutions Group has recently teamed up with Spireon and Sprint to offer credit unions an effective solution in their battle against delinquencies and repossessions. It’s the ultimate bridge between technology and your credit union’s auto loan collateral. Spireon’s LoanPlus CMS is a GPS-based collateral management system that allows credit unions to capture a wealth of real-time data about their automotive collateral’s location, movement and status, then leverage this data to improve member services, collateral management and collections.

LoanPlus CMS can also help improve your members’ loan payment behavior by discretely notifying them when their payments are past due. And it works, financial institutions utilizing LoanPlus CMS have experienced up to a 50% reduction in the number of repossessions and up to a 40% savings in the cost per repossession.  Plus, the latest generation of LoanPlus CMS runs on the Sprint 3G nationwide network. All of these benefits combine will help ensure that your credit union will keep auto loan delinquencies and repossessions at a minimum.

Click here to learn more about Spireon’s LoanPlus CMS. 

 

Make the Most of Online Auto Loan Leads

We know, it’s easy to follow up with those member service phone calls or walk-ins that ask about your credit union’s auto loan rates or prequalification. But are you equally thorough with the leads your credit union may get via email or social media? If you can’t answer yes to that question, then chances are you’re letting some valuable auto loan leads slip through your fingers.

One good reason to pay more attention to your credit union’s online interactions? A study from AutoTrader.com found that 60% of Gen Y respondents would rather apply for auto loans online. The survey, called "The Next Generation Car Buyer," also concluded that Gen Y now views dealerships as a place to mainly do research when car shopping.

Another reason to focus more on online loan leads comes from the auto dealers themselves. Most have discovered the hard way that online car shoppers are looking for same day responses when they contact a dealer. Don’t make the mistake of assuming those emails or posts are from unqualified or unserious buyers. In fact, studies show that Internet leads account for around 20% of all auto sales in the U.S.

One study that looked into how 125 dealerships handled 15,000 online leads discovered that shoppers who received replies within 10 minutes were three times more likely to visit a store than those who received a slower response. Waiting more than 20 minutes garnered the same results as if the dealer had waiting 24 hours before reaching out. And needless to say, reaching out with a phone call is always going to be more effective than just shooting off a quick email.

Wondering what your credit union can do to better tap into online loan leads? The Credit Union Member Discount from GM offers real-time auto loan leads when credit union members request a discount authorization code online. This helps your credit union’s auto loan department get a jump on the competition.  Click here to learn more about the Credit Union Member Discount from GM.

Six Ways to Boost Auto Loans at Your Credit Union

 by Amy Neale

As you might have read in last week’s blog, credit union loan growth is on the rise. In fact, over the past nine consecutive quarters, new auto loans have grown 10.7% and used auto loans are up 9.3%. Whether or not your credit union has experienced similar growth, there are still ways to boost auto loans:

1. Work with an indirect lending company like Credit Union Direct Lending.
2. Cultivate connections with auto research sites such as AutoSMART.
3. Target market to the 35-65 age demographic, especially those with incomes that range from $40K to $75K. The recent Credit Union Satisfaction Index (CUSI) from CFI Group showed this demographic was greatly interested in seeking auto loans from their credit union.
4. Offer incentives to members when they acquire new or used auto financing. Incentives like discounted or free auto club memberships can go a long way.
5. Join a membership enhancements program like Invest in America’s Credit Union Member Discount from GM which offers instant auto loan leads when your members get a GM discount authorization code.
6.  Make sure your frontline and lending staff are well trained and kept up to date on your latest auto loan promotions and rates and that your team has the skills to accomplish the loan volume your credit union needs. CUNA Mutual Group’s Lender Development program can help with this. 

Whichever way your credit union chooses to boost auto loan volume, the key is to be as proactive as possible. We’d love to hear other ways you have grown auto loans your credit union. Leave us a comment and let us know!

An Unlikely Way to Boost Loan Volume Online

If you’re like most credit unions, you rely on loan and rates pages on your website to help generate loan volume. We’re not saying don’t do that – it’s a proven way to increase loans. But if you’re looking for additional ways to boost loans, specifically used car loans, you might want to consider adding member-generated classified ads to your website.

By incorporating used car classified ads on your website, you could spur member interest and action to purchase a used car. And they’ll already be on your website, so what could be easier than applying for financing with your credit union once they discover a car they want? Here are a few simple steps to make it all happen:

• Put a call out in your newsletter, on your website and through member emails offering free used car classified ads.
• Have your frontline staff keep their ears open for members looking to sell their cars.
• Set up a classifieds section on your site. (Our brand new Classified Module for our Content Management System (CMS) makes the process nearly effortless – see below)
• Include links to a loan application and your rates information on the classifieds page.
• Include links to the classifieds on your rates page and used auto loan page.
• Ensure members are pricing their vehicles correctly with a trusted valuation program (we offer the easy-to-use NADA Online that enables you to provide members with accurate valuations).
• Mention ad listings on your Facebook and/or Twitter posts and in your newsletter.

Be patient, it might take a while for members to start sending you information. But the cost to include this in your credit union’s marketing plan is minimal and could be well worth taking the chance to implement.

About Our New Classified Module
CU Solutions Group’s new Classified Module can be easily added if you’re a current client using our Content Management System (CMS). The module lets you define different types and categories of items to list (such as job openings or used vehicles), add items for sale, upload and crop JPEG images, set dates for the ad to run, and review and approve or reject items submitted by members via the website. You members will be able to browse or search classified items on your website, respond to any items of interest and submit items to be listed.

Related services: CMS

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Get Proactive with Auto Loans

Credit unions offer a variety of lending services for members, including auto loans. To optimize auto loan penetration among members, credit unions need to be proactive, targeting potential opportunities and positioning themselves appropriately in the loan process funnel. Simply stated, the more a credit union can get in front of members needing auto loans and provide them the best options available, the better chance the credit union has to secure the loan. Why is this important? CUNA reports only 19% of credit union members have a new auto loan with their credit union. In addition, new auto loan growth decreased 16.5% in 2010.

The Credit Union Member Discount from GM through the Invest in America (IIA) program allows credit unions to provide members with a valuable discount and an opportunity to increase their auto loan volume. Through the LoveMyCreditUnion.org website, IIA provides credit unions the tools to get in front of members seeking auto loans. In the Partner Center of the website, credit unions not only have access to many free marketing materials, but also have the ability to access contact information for members who have requested an Authorization Code for the Credit Union Member Discount from GM. This data is updated weekly and invaluable information so credit unions know who to contact to secure their auto loan prior to the member going to the dealer.

GM is very supportive of credit union financing and wants to assist credit unions in securing auto loans up front. Mark Degnan, manager of GM incentives, feels “Providing customers with financing options is important to General Motors. Credit Unions have a trusted relationship with their members and we are delighted to complement that well-earned status with the Credit Union Member Discount from GM.” In fact, GM went to great lengths to include a link on the GM microsite that takes a member to their credit union’s loan application page or other designated loan section of the credit union’s website. If you haven’t taken advantage of this opportunity by providing Invest in America your designated link, please send it to us at IIAloanapplication@cusolutionsgroup.com.

Don’t be discouraged by sub vented rates offered by captive lenders. While it seems like a great offer, low rate financing offered by captives is usually available only to well qualified consumers on select models only. Generally, these are in lieu of consumer cash and incentives. So, members have the option of the reduced rate or consumer cash incentive. However, credit unions can offer their traditional low rates and take advantage of the consumer cash resulting in greater member savings.

By taking advantage of the Invest in America program offered by the CU Solutions Group, credit unions can stay in front of their members auto loan needs and increase their auto loan volume.

Related Services: Invest in America, Credit Union Member Discount from GM