Leveraging and Marketing Power of Internet for Auto Loans to Members Key to Growing Auto Loan Portfolio

WASHINGTON – With an increasing number of credit unions getting involved with indirect lending to boost their auto loan portfolios, CUs are quickly learning to appreciate and leverage the power of the Internet in the auto buying process. A white paper from Callahan & Associates, Using Your Website to Capture More Auto Loans: Best Practices in Credit Union Website Strategy, cites data from J.D. Power & Associates that show 60% of auto purchasers went online for automotive-related information in 2002. While the majority of this activity is research related, consumers are still increasingly turning to the Internet for transactions such as applying for financing, purchasing cars, and arranging for insurance and quotes. “Given these trends and their impact on credit union auto lending, this seems an ideal time to focus on ways that credit unions can better compete in the auto lending market.The credit union Website is an ideal way to provide members with the information they need to make better decisions regarding their auto purchase,” the Callahan white paper states. “Obviously the typical benefits of the Internet – such as 24/7 access, easily updated, depth of information – are at work here. But a further benefit – the ability to complete their financing online – is also appealing to particular member segments.” it continues. The Internet also offers credit unions the opportunity to level the playing field in the automotive financing market by becoming the member’s first and primary source of information and thereby the member’s “trusted resource” for financial information. “The data shows that credit unions who have positioned their site as a `one-stop’ resource for auto purchases or auto loan information experience greater levels of auto loan penetration than the sites that did not have much information online,” the paper reads. Credit unions have to contend with several obstacles to convincing members to use them for auto loans some of which are dealer-related – 0% financing and other dealer incentives – and others are credit union-related factors – many members aren’t aware of their CU’s loan approval requirements or CUs aren’t available to members when they do their auto shopping. “Ensuring that members receive their initial auto purchase/refinancing information through the credit union could help the credit union to educate members regarding `0% financing’ offers and provide them with accurate information before they face the auto dealer,” states the paper.”.Even when the credit union has a strong indirect lending program in place, there is a need to educate members of their credit options due to the many competitive options presented at the dealer.” Callahan & Associates opines that there are two segments of credit union members who go online to look for auto information – one is using the information to complete their transaction through personal interaction – either at the dealer, branch, or by phone – and the other is looking to use a `self-service’ channel such as online or fax. Interestingly the Callahan survey showed that while online members use the Internet to research various aspects of their auto purchase or auto loan research program, about half didn’t first look to their credit union or thought of their CU’s Web site as a resource. Still, comments collected from members show that online members want auto purchase/financing information to be available on their CU’s Web site. “Clearly the promise of online applications is the ability to receive a fast response or approval, yet some credit unions don’t yet have a system that is capable of providing an instant response.” The Callahan survey further showed that even though a credit union may offer members the ability to apply for auto loans online, many members don’t understand the steps in the online process, such as information required for the application, approval time, and method of receiving their check. Members are primarily going online to research their auto purchase, but “unless members have prior knowledge that a particular service is available, are they really going to go through several menus to find out you’re offering discounted GAP insurance? They may not even know what GAP insurance is. Credit unions should target member needs, and provide solutions to member problems.” the white paper states. “Providing basic but thorough information on all aspects of automotive purchasing and financing is the best way to ensure that members will make the final decisions while on your site,” it continues. -