Credit union marketers: The keys to selling quality auto loans

by: Patrick Grosserode

Nearly 250 million registered vehicles are on America’s roads, according to U.S. Census data. Most of them are private or commercial vehicles and many of them are financed. Has your financial institution been overlooking the potential revenue stream represented by auto loans? A high number of defaults during the economic downturn might have made some FIs steer clear of writing new vehicle loans, but a growing number of credit unions are rediscovering the opportunity auto loans represent.

The Financial Brand reports that 46% of credit union executives say auto loans will be their biggest opportunity for growth over the next 12 months. In a survey by TransUnion, about 84% of credit unions predicted auto loans would be among the top three growth opportunities in 2015.

In its report, TransUnion points out that overall delinquency levels for vehicle loans are low – even though they increased 11% for subprime borrowers in the past year. The number of loans to subprime consumers increased about 7% during the same time frame, TransUnion reports.

While fewer delinquencies may mean auto loans are again a good growth opportunity for credit unions and community banks, financial institutions wooing auto buyers should give extra care during the application and vetting process. The more laissez-faire approach some financial institutions took toward auto loans prior to the 2008 downturn is a risk no one can afford today.

continue reading »