What are the Costs of a Car Buying Service?

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(Last Updated On: April 27, 2022)

To that point: What are the costs of NOT having a Car Buying Service?

Both are great questions. Our experience has found it’s more practical to answer the latter. In doing so, we guarantee it helps you better understand the former.

Shopping Cart Key on Keyboard
It’s, like, that easy for your members to find a car and get financing somewhere else.

Before diving in, let’s make sure we’re on the same page when we reference a Car Buying Service. We’re talking about the online kind, not the concierge version. Though the steps to success for the latter are similar, they’re not our primary focus.

When implemented properly, an online Car Buying Service is a net positive for your credit union. It helps excite members, drive new loans, and offers a wealth of other side-benefits. We’ll get to those later.

First, let’s focus on the real goal of a Car Buying Service for your credit union: Loans. And the goodies that come with them.

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So, what’s the cost of not having a Car Buying Service? Put simply, it’s a loss of loans, the things you’re really aiming to get. Because…

Your credit union doesn’t sell cars. You sell loans.

And your members are online looking for them! 87%, in fact.

Sounds like a huge advantage. How might this be a “cost”?

According to surveys:

  • 95% (Google) start their shopping online
  • AutoTrader, NADA, KBB, and others generate millions of unique visitors monthly
    • Each of those funnel visitors to LendingTree – a financing partner which isn’t you
  • Over a third of the time people spend researching a car purchase is now on financing
  • 70% of shoppers check out 2 or more lenders

Is your credit union one of those lenders? How can you ensure it is?

Right now, as you read this article, your credit union is losing loans to the web.

Having a Car Buying Service can steer those eyes towards you for lending choices. So that’s the secret to more auto loans, right?

To be honest…not always. Positioning is essential. And trust. But now I’m getting ahead of myself.

How Do Car Buying Services Make Money?

Since you came here looking for the costs of a Car Buying Service, let’s answer that question directly. Put simply, there are two ways a Car Buying Service makes money:

  1. Your institution pays.
  2. The dealers pay.

Those in the former category have a monthly fee which is based upon the member size of the group.

This can range from a few hundred dollars monthly for a 6,000 member group, to $3,000 for a group of 60,000. The more members, the higher the monthly fee.

For those which charge dealers, they may be performance-based with certain marketing requirements. (That’s how our represented Car Buying Service, powered by TrueCar, works)

Some come bundled with your indirect platform or other existing service, though we find them to be less able to satisfy member needs and credit union goals.

They’re “better than nothing”, but our experience finds a dedicated service accomplishes more for all parties.

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How do Car Buying Services earn money?

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We did say above that they’re either fee-based or free for your credit union and your members. Of those which are free, who is really coming up with the cash? You’re correct: Dealers.

These Car Buying Services make their money as a dealer lead generator. Their pricing setups vary, ranging from monthly subscriptions to performance pricing. However, their business models ensure dealers are the majority payors.

Captive Financing Car Buying

Additionally, an emerging trend by auto manufacturers is building their captive capital services up as a pseudo-car buying service (page 15). They empower people to build a car (on the OEM website) and apply for captive financing in the same place.

Inventory and delivery is handled by your chosen local dealer. This is a powerful way to connect loyal brand customers with their vehicle, as Mazda demonstrates. It’s also an integration of online purchasing, which Cars.com found more than 70% want.

Of course, you’ll never know your member is in market, nor will they know if they’re getting the best deal possible. You know that 0% APR financing sounds great, but is it the best choice? That’s not a conversation you’re going to get a chance to have.

No Choice Is A Choice

Whether people use a car buying service financed by the dealers, manufacturers, or your institution, they are looking online.

And no matter what, it’s free for the user to access all the features and benefits of the service. Depending on the platform you choose, the biggest cost is not choosing one.

Remember those established car buying websites we mentioned above? Your members are their regular visitors. And they’ve used these sites for over 20 years. They’re not ignoring you; it’s just that you don’t even get a second thought when they begin their shopping.

How will you change that mindset and entice members to start at their credit union? Hint: Your Car Buying Service. And one more thing.

Marketing. Marketing. And more Marketing.

In our experience with dozens of credit unions and their Car Buying Services, this is the make-or-break component. The services recognize it as well, and many, especially those which are free, build marketing requirements into their agreements. Outbound communication is essential for letting your members know about the Car Buying Service.

Online Marketing Steps on iPad
There it is. The fabled marketing flowchart.

The “cost” here is less than you may expect. While your marketing staff does need to create campaigns (which can supplant or add to your existing auto loan promotions), the Car Buying Services will assist with graphics, copy, templates, and even marketing plan development. In fact, we know that one service offers marketing dollars, helping provide incentives to your members at no cost!

If your credit union is ready to make the marketing effort, a Car Buying Service might be a great fit. Plus, those already researching a car online rate “trust” as the highest reason to choose a lender. You’re made for this!

Once members are using your Car Buying Service, there are some more “costs” you must consider.

Follow Up

All online Car Buying Services have prominent “Call to Action” buttons which your members may click or tap to “Get Pre-Approved” or “Apply Now”. It’s all about making it easy, right? Too bad that’s not all it takes.

Those who complete an application are in your flow. But even there, you are losing members to that application’s complexity. A credit union-focused fintech called WithClutch creates a seamless experience for members, while getting all the documents into your LOS. Often without any effort from any staff.

Satellite Dish
You don’t need quite this level of outreach. But it can’t hurt…

Now, the “cost” of follow-up. You’ve got financing handled, but members won’t reach out about the car. Because you’re the loan people. Enter the outbound team and an efficient process to manage these opportunities. As shoppers complete a form on the site, you get that as a “lead” (as do selected local dealers). In the words of a certain starship captain, “Engage!”

Get in touch with these active car-searchers quickly by e-mail and phone. This is the prime time to encourage a loan application.

So, there are “costs” in terms of:

  • Marketing
  • Internal follow-up processes
  • Outbound engagement

Are there any other costs? Just a few, and they technically relate more to your auto lending program as a whole. For full transparency, we’ll include them here.


To know where you’re going, it’s best to know where you’ve been (and where you are). That’s the case for your auto lending as much as anything else. Chances are, you already track your loans, based on monthly or quarterly goals. Now there’s one additional layer: What is your Car Buying Service delivering? If you’re putting effort into this service, it’s nice to see how it’s helping, right?

Golf Flag
Flag those loan apps!

Logistically, most Car Buying Services are separate from your LOS and core. So the cost is in developing the best way for them to “talk” amongst each other.

With our clients, we find basic “loan flags” and other tools fit the bill, rather than costly APIs or integrations. Keep it simple!

Knowing where leads come from helps inform all your teams on where there’s room for growth, improvement, or a shifted focus. It may “cost” some time and effort to put this tracking in place, but you become a more nimble and responsive organization as a result.

What are your Goals? Direct or Indirect?

A Car Buying Service is best at driving traffic for direct auto loan growth. Since members begin their search (and the fun part to boot!) with you, it’s easier to “keep them close” throughout the process. Plus, you know when they’re in the market!

Puzzle Piece Fitting In
Know how your strategies fit together.

Before implementing a Car Buying Service, it’s important to clearly define your goals. We’ve worked with some credit unions which only wanted to grow their indirect channel. Their Car Buying Service was actually making that more difficult, as members were engaging with them directly for loan applications!

Platforms exist to serve your indirect channel, and they are typically integrated into that system. Their time and resource costs are often “bundled” with the whole indirect platform to help your credit union achieve stated results.

Whether you’re all about getting every possible direct loan or happy to work with dealers on indirect, it raises a point few consider before our conversations…

Dealer Management

If your credit union engages in indirect, it’s likely this is no surprise to you. It’s essential to develop and maintain relationships with all your dealer partners. This helps remind them why they’d want to steer buyers towards your financing, and also contributes to your overall goals.

With a Car Buying Service, dealer management becomes essential for smooth member experiences. There’s an enormous variety in dealer networks linked to Car Buying Services. Some are regional, while others are nationwide with 15,000 or more dealers.

Recommending you speak with all of them sounds like a pretty unreasonable cost, right? We’ve got a better suggestion.

Road Sign Question Marks

When working with dealers, these are the most common questions our credit union partners face. “How do we:”

  1. Ensure our leads are protected from “flipping”?
  2. Confirm our members have a consistent experience, regardless where they go?
  3. Work with dealers on special member-only pricing?
  4. Address any dealer-related member issues?
  5. Determine what qualifies for a direct or indirect loan? (For those CUs with an existing indirect relationship)

We suggest working with a Car Buying Service which handles or assists with these challenges. For those which are specific to your CU-to-dealer relationship, we suggest designating a Dealer Relationship manager. You probably already have someone; this just helps them present the partnership in a clear manner for all parties.

Of course, indirect lending, as it’s done at many credit unions, isn’t something we believe even fits your mission.

In Conclusion

“Cost” is more than a dollar outlay. In fact, dollars were rarely discussed in this article. Time, resources, and effort are common costs. It’s about creating a net-benefit for everyone: Your credit union, your members, the Car Buying Service, and the dealers. Your role is crucial in that process!

By defining your lending objectives and following a clear procedure, a Car Buying Service can “pay for” all its costs through increased interest and non-interest income. Plus, members thinking of you for their car search can then consider you for other financial goals. Talk about engagement!

Want to give a Car Buying Service more thought? We have a category of articles which you will find valuable in your due-diligence (we even share a list of the best providers!). Here’s a selection:

Credit Union Car Buying Services: Benefits/Advantages

Best 5 Online Car Buying Services

13 Steps to Choosing a Car Buying Service for your Credit Union

10 Steps to Supercharge Loan Growth with your Online Car Buying Service

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Joe Winn - CU Geek

Blogger. Speaker. Part-time Jedi.

Focused on helping your bank or credit union grow in the face of emerging challenges.