Ask Members – Are You Smarter Than Your Auto Dealer? Equip Your Members for the Car-Buying Experience

When it comes to the credit union difference, the bargain auto loan rate has often verified the big difference. Then why isn’t every car buyer getting their loan from a credit union? With a slowing auto market and tremendous competition, credit unions must be more than just a great rate.


As of this week, credit unions offer a 48-month new car loan for 166 basis points lower than the average bank rate. When it comes to the credit union difference, the bargain auto loan rate has often verified the big difference.

Then why isn’t every car buyer getting their loan from a credit union?

With a slowing auto market and tremendous competition, credit unions must be more than just a great rate. In 2006 16.8% of auto financings were acquired at a credit union, down from the record 17.1% in 2005. With stagnant forecasts for 2007, where will the credit union auto loan share end up this year; higher, lower, or in between?

The Internet Age
The Internet has transformed the car buying process - more than 8 out of 10 car sales are researched on the web before an auto purchase, according to JD Power. In today’s tech-focused auto world, the car buyer is evolving into a hunter and gatherer of data. Car buyers are walking into dealerships equipped with information, but all they may know about financing is how much they can afford a month. They demand a fast, simple, one-stop shop. They want the right color, and they want it now.

Playing in the Majors
Despite this perceived confidence of outsmarting the dealership at their own game, many car buyers still over-spend. With the excess of advice and information available, today’s consumer often thinks the more information they have, the better their decisions will be. There is reliable information out there, and with some patience and shopping around, members will end well-informed rather than ill-informed.

Equipping your members with the knowledge and strategy necessary to experience a positive car-buying process further strengthens the opportunity for a long-term relationship with your members.

Don’t Wait for Them to Come to You
Let your members know about your rate. This means giving your great rate prominent placement on your website, mailing unbeatable offer notices to your members letting them know they’re pre-approved. Talk to members about your program whenever it’s appropriate; in phone conversations, at the branch, and especially when your members are applying for other loans.

Staff Training
“We have junior lending staff permitted to underwrite loans because we’re able to spread that approval process through more people. As a result, we capture more business,” says Scott Ford, Manager of Central Underwriting at Postal CU ($428 million in Woodbury, MN). Well trained staff go beyond the loan department in a strong auto lending program. “Hello, would you like to hear about our low interest auto loan?” is the service representatives greeting at Justice FCU ($394 million in Chantilly, VA). Valuing the potential of each credit union employee is key to getting your message across.

Plug into Outlets
Get the word out about your auto loan program through resources outside of the branch. Indirect lending, a growing trend, can link your credit union rate directly to car buyers through hundreds of dealerships in your area. Anheuser Busch Employees ($864 million in St Louis, MO), offers a .25% lower rate to members who purchase a car through their co-branded site with Enterprise Car Sales. Partnering with services that deliver value come in all forms, including through local advertising that can be affordable and build great networking relationships.

Options, Options, and More Options
Let your customers know they have options when buying a car. As a growing number of consumers are turning to the web to purchase their vehicle, car retailers are multiplying. Encouraging members to kick the tires and do some research before they hand over their money can save a lot of grief in the long run.

Read Them Their Rights
Buyer’s remorse inflicts consumers, especially with major purchases like a vehicle. Let them know they often have options when it comes to getting a second chance at a better rate, or returning the vehicle, even after they’ve signed on the dotted line. A contract can often seal the deal, but knowing your local laws and encouraging members to read the fine print will enforce your role as a valued resource. Returning or exchanging used vehicles can often be more difficult, unless you’re dealing with a lemon. Building trust in the used car market takes extra effort. Used car buyers at Enterprise Car Sales have up to seven days or 1,000 miles to return the vehicle, with no questions asked. Most smart vehicle retailers would rather have a satisfied customer than a single sale. But, it’s important for members to be encouraged to take their time and sleep on it, before they commit to a large purchase.

As spring rolls in, car shoppers awaken and prepare for the buying season and so does the rest of the industry. While credit unions post their tempting rates, those who offer more, deliver value in a crowded playing field.



This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

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April 23, 2007


  • Great Article! Could it possibly be that credit unions are assuming that members already know what a great resource they are for the ENTIRE car buying experience? Could be. If you look at many of the CU websites (including even some of the large CU''s), you''ll discover that many have their "Car Buying" programs ill positioned. And let''s not just get stuck on great rates! A strong network of "Preferred Dealer" (fleet) contacts can be just as important to members---to WOMEN--maybe even more so! Makes for a SAFE and MORE PREDICTABLE car buying experience. Thanks for great "heads up"!
    Roger Conant
  • It was recently announced that 9 of 10 financing decisions is made at the dealership. Having strong relationships with your local area auto dealerships is a must when your current members go to these dealerships to purchase a vehicle. Especially if you refer your member to the dealership. Without strong dealer relationships, you may find the dealer financing your member with a competitor of yours.
    Frank Mercer
  • I find it amusing that Enterprise tries to elevate themselves above car dealerships. WOW! Who and what do they think they are? I ''ll tell you. A rented used car lot with previously owned "rental" cars that get driven all over the planted by people who don''t care about these cars and then get inspected by inferior and lower paid technicans than franchised dealersand . Then they get sold to your members for a price that usually is above the true market value. I can assure you, Enterprise makes plenty of money off your members. Their one price strategy should fool no one. Your next article should be a little more respectful towards car dealerships. Since, that''s all you really are anyways.....