It should go without saying that people search online for their next car. We’re going to say it anyway. And a lot more, all to help you boost your direct lending, ancillary income, and member relationships!
Wave goodbye to all the loans your credit union lost to the web!
Car buying sites such as Auto Trader, J.D. Power (formerly NADA), and Kelly Blue Book have been around for over 2 decades. 20 years. That sounds legit. I’ll try them first. You know what? Your members are using those sites, too.
That’s bad news for your CU.
Why? In the internet’s early days, these sites were simply companion resources to their paper publications, which had subscription fees. Today, that’s not how they make money.
Now, they’re displaying ads from dealerships, manufacturers, and, the biggie for you, their financing partner. Yes, these websites smoothly guide visitors to easy financing with Capital 1 or LendingTree.
If your member uses either of these lending options, do you get the loan? Thought so. Your institution is losing loans to the web before you even know members are in market.
You’re skeptical. I understand. How about this…go check out any of those car buying websites. I’ll hold your place in this article for when you get back. And while you’re distracted…
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Hello again! How was it? Simple? Seamless? Terrifying? Now you see what you’re up against. What can your credit union do?
“Well…our CU does advertise on our website for auto loans.”
That’s great. And given that 87% of all customers now research financing ahead of time (60% apply for pre-approval), you’re well-positioned, right? Not really. Remember those car buying sites most visit? Those are the applications getting used.
Without a (promoted) car buying service, you’ll never even know members are in the market unless you run a refi campaign.
At this point, you’re wondering if a credit union car buying service is worth it. Great question. We believe they are more than worth it; a car buying service is essential for your credit union’s auto loan growth.
We want to help you capture more of your members before they slide into the online funnel.
We’re going to look at car buying services for your credit union with the following considerations:
- Benefits for your CU
- Benefits for your members
- Ensuring a quality member experience
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Benefits for Your Credit Union
Partnering with an online car buying service:
When you know your members are in market, you can better engage them for financing. It’s also likely you can offer them better rates and terms. Plus, there’s enormous potential for non-interest income.
Truly Serving Your Members
As you help your members navigate a great financing solution, you can also explain how products like credit insurance (or debt cancellation), GAP, and warranty (MBI/VSC) could make their lives better.
Your credit union grows its income, and your members are better protected against the unexpected. Now that’s serving your members!
Branding and Name Recognition
Beyond just providing a resource for your members, it also increases brand recognition and service diversity of your credit union. No matter which provider you choose, your portal will be branded with your credit union name and logo.
Of course, your own financing is accessible through the site. No Lending Tree here!
Members access the site through links on your website and through marketing efforts across all your communication channels. Of course, they don’t know it exists until you share with them!
Our experience has found e-mail to be the most effective, though awareness grows through seeing/hearing it on other mediums (like on-hold messaging, statements, branch digital signage, etc.).
Benefits for Your Members
Since you are encouraging members to use your platform rather than the other online services they are used to, it’s important you meet or exceed their expectations. Otherwise, they’ll just go back to those sites!
Here’s what we found to be generally expected by your members:
Build A Vehicle
Every popular site lets a visitor build their car (if new) and easily search inventory (for used).
To that end, all car buying services must allow users to:
- Model year
- Model & body style (trim)
- Color – exterior and interior
- Option packages (engine, transmission, technology, appearance)
Once the user makes these selections, next steps vary depending on the system. It may display a form requesting member’s name, address, phone, and e-mail before displaying relevant dealer inventory near them.
Your members expect a platform that helps them find an exact vehicle on a dealer lot before ever leaving their home.
The information submitted is shared to the same dealers they see, as well as your credit union. This informs your team that a member is “in market” and is an auto loan lead.
Back on the website, your member can view inventory to get vehicle-specific details. We recommend platforms which allow seeing a “real-time” view of cars, as this meets members’ expectations of the car being available.
All systems will display the Manufacturer’s Suggested Retail Price (MSRP). Depending on the provider, some may also include Dealer Invoice, but be aware that these prices are less important with today’s inflated pricing.
The most helpful systems include a Guaranteed price, special member pricing, or even limited manufacturer incentives.
A few platforms direct the user to call a dealer to receive “special” pricing. We’re not huge fans of this approach since it isn’t what you’d expect when shopping online. Imagine if Amazon didn’t show you the price unless you called customer service. Weird, right?
No matter which system you choose, you’re keeping members close while they find their new car. Isn’t it cool to know you’re helping members save just because they found their car through your system?
Since car buyers may not be totally set on a specific make and model, several systems also display similar models and include consumer reviews to further simplify members’ research.
Twice as many used cars are sold annually as compared to new. Most likely, your credit union’s auto loan portfolio reflects national averages and is at least 66% used.
That means any car buying service you consider must have robust used car search capability and nationwide available inventory. All systems will have at least some basic filters:
- Model year range
- Price range
- Odometer range
Other options might include trim levels, transmission, 4WD/AWD, and engine choice. As members narrow down their preferences, results should display automatically.
Once they find a car, it’s to a similar contact form as on new. Some systems autofill if that’s not their first search. Always nice to save member’s time!
The pricing and dealer contact information is then displayed. A few services allow dealers to add special “member discounts” to vehicles, which can only be redeemed if they use your system. More savings!
Was that perfect car you found drowned in a hurricane? CarFax gives you this, and other essential answers about the car’s history. Most car buying services working with credit unions offer CarFax reporting.
Depending on the system and dealer, they may or may not be free of charge. If not, there will be a link for the member to purchase the CarFax report. We believe members should have this information available to them for free.
Note: They are the best known, the Jello of car history names, if you will. However, CarFax isn’t the only one. Our partner provider, TrueCar, uses AutoCheck from Experian.
Call to Action
Along with build and search, credit union online car buying services will contain calls to action. Since your objective is to acquire loans, these CTA’s will be labeled “Get pre-approved” or “Apply for financing”.
They may be located within the navigation bar and as buttons throughout the portal. These CTA’s will link to either your credit union’s auto loan web page or directly to your LOS loan application.
Most car buyers already own a car. The #1 question they have is “what’s my car worth”.
Some credit union car buying services can help the user answer that question through the use of a trade-in estimator tool. It will also separate expected value from trade-in vs. private sale.
Providing a guaranteed trade-in or cash offer on the members’ current car (a trend started by Carmax) is gaining more support. This may be available on certain systems in limited areas.
Such a platform lets the member enter only their license plate to begin the process. Then, they give a short rundown of their car’s condition: Scratches, dings, tire age, add-ons, etc.
Each entry provides an exact dollar amount it affects the value, positive or negative. By offering such a system, your credit union adds trust and transparency to a process which typically has very little of either.
For your members, this bit of technology helps them get to where they want to go quicker. The widget is actually placed on your web page, eliminating the need for your member to click away to your partner portal.
Instead, it makes your credit union website part of the search and build process. This convenience also helps increase visitor to lead conversions, thereby maximizing loan closings for your credit union.
“Can I afford this car?” 86% of shoppers calculate monthly payments. Most services available will include calculators in both the new and used car sections. Members can use this tool to assist in figuring out how much they would pay. Some of the fields which members may edit:
- Down payment
- Loan term
- Interest rate
While often overlooked, directing members to a specific person at the dealer can add to your member’s experience. Walking into a busy dealer lobby can be intimidating.
Some platforms will offer members a trained dealer contact (with their photo!) to take away some of that anxiety while streamlining the process.
Then, when they walk in, it’s not the first person to get to them, it’s an employee familiar with the terms and rules of the car buying service (like a no-flipping policy, if available).
3rd Party Technology
FinTech has found its way into auto lending and can now directly integrate the car shopping and pre-approval processes. What does this mean for your members?
Using new tools, members who are pre-approved for loans may view vehicles which not only fit their specifications but also those which fall into their specific monthly payment affordability.
Also, members may be able to complete all the “paperwork” online (70% are more are willing, if it’s available!), and even get offered ancillary services. Talk about making it easy!
If available, this type of service will be offered to the credit union as an extra cost and may include separate contractual terms.
With expectations of doing everything online (or even on your phone), we suggest you consider how this could find its way into your current process. Anyone up for some fun videos describing GAP, VSC, or Payment Protection?
Member Experience is Critical
We know. Directing your members to car dealers raises concerns for your credit union, namely:
- How will dealers treat my member?
- Will members actually get a better deal?
- Will dealers try and flip our direct loan?
It all comes down to the relationship your car buying service provider has with the dealers. To them, your portal is a lead generation system. In fact, directly connecting with a group of buyers, in this case, your members, has real value to the dealer.
The sites which provide dealer contacts often put members in touch with the dealer’s internet sales team, who are focused on “moving metal”, not necessarily on winning the financing.
If the provider offers dealers performance-based or subscription pricing, they get the safety of a no-risk arrangement and are incentivized to treat your members well to earn the sale.
Additionally, if your provider has wide exposure and brand recognition, they can work closely with dealers locally and nationally to ensure prices really are competitive (remember, some sites let you know if you’re getting a good deal).
Finally, flipping. It’s a huge concern. We understand. The services which offer guaranteed pricing usually also include a no-flipping policy. The dealer can earn the sale, but only the member can ask about financing.
We figured this would be a regular challenge, so for our own clients, we maintain a support channel with our car buying service provider.
It allows them to follow-up on any dealer flipping or experience issues. With over 100 credit unions in the system, issues are surprisingly rare.
Beyond the Basics
Now that you know the basics, feel free to learn more with these resources:
- 5 Best Credit Union Online Car Buying Services
- Ultimate Guide to Credit Union Car Buying Services eBook (Our top resource!)
- 13 Steps to Choosing a Car Buying Service for your Credit Union
- 10 Steps to Supercharge Loan Growth with your Online Car Buying Service
- Concierge and Online Car Buying Services Comparison
We believe our solution addresses everything presented. Of course, it may not be a fit for every credit union. There’s no way to know until you look! Schedule a quick chat to meet us and decide if further conversation about a car buying service makes sense.
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