The summer auto-loan pursuit-a-palooza

Another busy summer vehicle-selling season is upon us, and a majority of us are looking for the best strategies to maximize loan growth.

Considering the volume of vehicles to be sold, prospects are good. According to NADA (Nov. 2015), “New light-vehicle sales are expected to rise to 17.7 million units in 2016. This would mark the seventh straight year of increasing U.S. new-vehicle sales.

While prospects are good, competition has never been tougher. If your shop is into indirect lending, you’ll be competing with a long list of other lenders (many of whom are other, larger credit unions) on price, dealer reserve, terms and credit standards, and response and turnaround time. In the credit union space, large lenders with significant scale typically rule the day. If your shop is not into indirect lending, you’ll be competing with those picking off your members at the dealership.

Modern techniques available

Credit union pioneer Louise Herring said, “We must remember what we started out to do and then find ways to do it with the modern techniques available.” We’re lenders. It’s at the heart of what we do – that hasn’t changed. But the way we get those loans has changed for many of us since Louise Herring helped charter more than 500 credit unions back in her day. None of us can afford to sit back and wait for members to call on us with a loan request. Rest assured, there is always some organization who wants our members’ loans, be it a prime or predatory lender. We’ll have to fight for every loan we win. Fortunately, we have modern techniques available to help us identify and capture loan opportunities.

Below are several modern techniques to consider when formulating your summer auto-loan growth strategy. I recommend using the Experian products below because of my experience with the company. It has the largest share of the CU marketplace for a reason – reliable turnkey solutions, and a demonstrated commitment to credit unions in the underserved consumer space.

  • Recapture your members who were “sold” the dealer financing. I recommend using Experian to compare your existing member list to find auto loans that were recently financed elsewhere. Use this list to take back the loans. It’s amazing how far prescreening tools have advanced since I was actively in the lending business. Experian’s experts can help you craft a custom list to target the best loans you want to recapture, picking only those that match your yield and risk criteria.
  • Prospect potential buyers before they start shopping! Dang, I wish I had this tool back in the early 90s when I was VP of Marketing and doing my best to grow loans! Experian’s In The Market Model for Auto enables credit unions to proactively market to members before they are actively shopping for credit. Credit Unions can target prospective buyers BEFORE the onslaught of marketing during the busy summer auto-buying season. Great timing is critical to success, as it’s easier to get a loan at the time of purchase than to try to recapture it later. Credit unions have a long, successful track record of loan pre-approvals. Experian offers sophisticated, easy to deploy prescreen solutions as a modern-day technique to get the most out of our efforts to keep our members’ business.
  • Target thinner-credit-file Millennials. Millennials are buying cars in big numbers these days. Now the largest generation in the country, Millennials bought 4 million cars and trucks in 2015 – second only to the Baby Boomers, according to J.D. Power’s Power Information Network. Millennials’ share of the new-car market jumped to 28 percent. In the country’s biggest car market, California, Millennials outpaced Boomers for the first time.[1]

Another modern technique I’m excited about is Experian’s Extended View program, which helps lenders qualify thin-credit-file consumers. These consumers have little or no traditional credit, but have established good credit with other providers, such as cell phone companies, rent, utilities, etc. Extended View provides credit union lenders with enough supporting data to approve a much larger pool of good loans.

The season is here, what’s your strategy?

We are lenders. Consistent, profitable loan growth should always be our top priority. The challenge is that many of our credit union shops have non-loan related priorities that will trump an appropriate focus on this busy lending season. These credit unions will miss out on the opportunity (while it is here). We never know what the economy will be tomorrow, and have to seize what we can today.

The good news is that, overall, our credit union space is growing loans at a good pace, and that means many of us will likely make gains during this summer season. However, if your credit union is not attaining the profitable loan growth you need or desire, I challenge you to look at new techniques and different strategies to make the most of this peak auto-buying season – before it’s too late.