Between inflation, inventory shortages and ridiculous vehicle pricing, it’s a tough time to buy a car. It’s not much better owning one. For the majority still without EVs, fuel prices are straining budgets. And what happens if your car breaks down or is totaled in an accident?
Thank goodness credit union GAP and other protection products exist, where these kinds of stressors are given no quarter. You can’t do much about gas prices, but savings in one place can help another.
You’ve got all sorts of ways to protect your members regardless of the larger economy. Yet they’re entirely useless if your members don’t have them. Or worse, don’t even know these products exist. That’s what we’re going to resolve here, now.
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Discuss Protection Products Early
Your members spend more than 12 hours, over the course of potentially months, shopping for a car and financing. If they first hear about your protection products at the literal last minute, they’ll understandably just decline.
Communicate their value early and continuously. I don’t want to pay another $400 for credit union GAP on my already overpriced car. But I really wouldn’t want to pay $10,000 or more if it got totaled a month after purchase and depreciated something fierce.
Same goes for your credit union VSC, payment protection, or any other protection product.
Each protection product provides value. The loss of a vehicle, job or family member would cause undue financial burden on most anyone, and these protection products could make a massive difference during a terrible time in their lives.
That sounds like the ol’ credit union mission of financial empowerment and protection.
I cannot express how important your protection products are for your members and your credit union. We all share pride when providing financing for someone whom other institutions denied. That’s great and very credit union-to-the-core.
Credit Unions Are Protection Providers
Every credit union I know offers auto lending. Some do indirect, but all provide direct loans. The vast majority of them also have extras to add in with your loan. In the industry, we like to call them ancillary products: GAP, debt cancellation, credit life and disability, or vehicle service contracts.
You may have a few others, or they might be known by other names. Either way, they exist as tools to accomplish two things (besides making money):
- Protect the member financially against unexpected life events
- Reduce your institution’s risk of delinquencies and need for repossessions
“Protect the member financially” sounds a lot like supporting “financial empowerment”. In our other writings on the topic, we said it helps people avoid “negative financial spirals” and enjoy lives with less stress or challenge over money.
So every time you hear “ancillary products,” immediately think of your credit union’s protection suite. Sound good?
Insurance is Protection, Too
A lot of credit unions manage their insurance products. Some partner with outside agents. Either way, you’re providing a product or service because it fits the credit union mission. which means it helps support financial empowerment. Thus, insurance is also a protection product.
I don’t know your insurance program, but I am certain it is perceived as a value by your institution. In other words, there’s some reason a member would get insurance through their credit union instead of, say, from a gecko.
Selling the Point…and the Products
Here’s the point: Your credit union has all sorts of products to help members that also generate necessary noninterest income.
You can reduce unnecessary member suffering by selling ancillary products to those who need them.
Your credit union can grow its noninterest income through the sale of ancillary products to better serve members, staff, and the community.
But only if your credit union sells them!
Embracing your mission at every level means doing something about those punitive fees. But how to replace those revenues? Get answers in our Replacing Overdraft & NSF Fee Income Cheat Sheet!
Sell to Empower & Protect
You’ve helped empower, which is heartening. Now make sure those loans and vehicles continue to serve, rather than burden, your members.
At this point, you’re already subscribed to the Learning Library, right? Perfect!
Until next time, keep it honest!
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