Focus On Auto Lending

Discover how one credit union grew its loan volume while also improving its new member growth rate.

 

By CU Direct

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Erie Federal Credit Union ($366, Erie, PA) was looking to increase auto loan volume and recognized that the key to growing loans was to overcome opportunities lost to dealer-originated loans. The Erie, Pennsylvania-based credit union needed a solution that could help drive more new member loans, as well as capture additional member loans at the dealership.

The Challenge: Increase Loan Volume And Add New Members

The credit union sought to add a new service that would enable members to research vehicles as well as apply for loans and get approval prior to visiting the dealership. Erie Federal also wanted a service that promoted auto lending as an added benefit to members, enabled the credit union to tap into members’ auto buying process earlier, and helped it successfully capture more member loan opportunities.

The Solution:  Implement A Vehicle Shopping And Loan Application Tool To Help Drive Loans And New Members

After investigating several different options, the credit union determined that they needed a solution that incorporated all aspects of the auto-buying process, fit well within the credit union space, combined a credit union-branded vehicle research tool and online loan application with dealer inventory, and integrated local dealership networks and online decisioning, as well as NADA and Kelly Blue Book ratings and reviews.

“We were looking for a vehicle research tool, something that had an online loan application, local dealership networks, and that we can brand with our credit union website,” says Eric Brotherson, Erie Federal’s strategic marketing analyst.

A few solutions offered online tools similar to what the credit union was looking for, but none were in the credit union space and all offered competing financing. To ensure that they maximized loan opportunities, Erie Federal decided to implement a website solution that offered all the tools and functionality it was looking for, as well as provided the ability to co-brand the site as their own.

Incorporating the new website program with Erie’s existing website presence was a simple, straight-forward online process, and provided a seamless extension of their existing website. When used in conjunction with the program’s corresponding pre-approval application process, it providesd a quick, almost effortless turnaround of indirect loans that both dealers and members appreciate. The credit union recognized that their members would value taking ownership of their financing options and the ability to bring their loan approval with them when they visit dealers to purchase a vehicle.

The website program includes a branded mobile/smartphone app that provides an additional tool to help members research vehicles and apply for their loan before visiting the dealership. The app also helps credit unions connect with younger members that rely on mobile technology to perform much of the vehicle shopping process.

The program helps to enhance business relationships with local dealers as well. Auto dealerships find value in the program as an online marketing tool that places their inventory in front of members and helps drive additional customer opportunities.

A Window On The Local Market And New Loan Opportunities  

Erie Federal also had the unique capability to examine both market penetration and dealer penetration, as well as a look at demographic distribution reports. The ability to tap into members’ decision making earlier in the process also helped the credit union capture and retain more member loans.

The Results:  Indirect Lending Grew At A Faster Pace Than In-House Loans

As a result of implementing the website program, Erie Federal’s indirect lending grew at a faster pace than in-house loans. Indirect loans now account for more than 50% of the credit union’s portfolio —five times the volume of its in-house auto loan portfolio — and the percentage has continued to grow each year. New members are attracted by the favorable rates and friendly process, and a great service tool means greater retention among those new members.

Since implementing the website program, Erie Federal has experienced an average new member growth rate of 23% via the indirect channel.

Erie Federal’s members have expressed how much they value both the vehicle research tools and the ability to print out their results to take with them to the dealer. The credit union’s vehicle research site now provides members with more than 3,600 vehicles in local dealer inventory to research and shop from.  Further, having the co-branded site linked to Erie Federal’s website keeps messaging consistent and seamless. Members feel it’s a comfortable online space that provides a vital educational tool to help them with the vehicle research and purchasing process.

Analytics have revealed that site traffic to Erie Federal’s co-branded CUDL AutoSMART site has steadily increased year-over-year. The site now averages 90 unique visitors per month and traffic reaches as high as 200 visits per month during peak auto-buying months.

“We have had a steady increase of about 6% annually to our Auto Center page,” says Brotherson. “We can attribute this increase to our marketing efforts as well as having the CUDL AutoSMART product as one of our most visited links.”

Erie Federal has also realized a 52% loan approval rate using the SMART Approval process through its AutoSMART site.

In response to online advertising opportunities through its AutoSMART site, dealers quickly realized the value in marketing their stores to the credit union’s members and bidding has become extremely competitive. In the last two years, dealer participation in the program has grown by more than 60% and now includes 65 dealerships.

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March 4, 2013


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