CUNA Mutual Bets on CarSaver

Once upon a time, the path to buying a car usually included a stop at a lender.

That path was often bypassed with the proliferation of indirect lending in recent decades. Even more recently online lending platforms like Carvana, Cars.com, Shift and Vroom have placed traditional lenders further off the beaten track.

It’s an existential issue for credit unions.

Paul Rindone, a CUNA Mutual Group vice president who is in charge of its initiative to develop auto lending options for credit unions, called it the “30-20” problem: While credit unions continue to hold about 30% of U.S. car loans, they’re now closing only about 20% of the loans.

“Our mission is to change that,” Rindone said.

As one of its answers, CUNA Mutual Group announced on Jan. 20 a plan that would allow credit unions to be the first stop for online car purchases using an online, white-label platform called CarSaver. It is also announced that its venture capital arm, CMFG Ventures, has invested “substantial funds” in CarSaver.

Rindone said the CarSaver program will complement CuneXus, a fintech company based in Santa Rosa, Calif., that CUNA Mutual bought in 2020 that offers online loan approvals.

A credit union enrolling in CarSaver can create its own storefront, approve its own dealers and direct members to its site. There, they can not only get approved for a loan through the credit union, but also pick out and buy their car.

“We’re trying to help credit unions punch above their weight by bringing financial technology more in a solution for them that they can implement hopefully with a small project lift, because everybody’s short on resources,” Rindone said.

CarSaver Management, based in Franklin, Tenn., just outside Nashville, was founded in 2016. The next year Wal-Mart and Auto Nation began using the platform to sell cars, using Ally Financial as its preferred lender.

The private company doesn’t release sales figures, but its platform has worked well enough to convince Nissan to adopt it last February to power the Nissan@Home experience for online sales. Automotive News was impressed enough last October to give CarSaver one of its PACE Awards, which honors automotive suppliers for superior innovation and technological advancement — in this case for creating an end-to-end, 100% online car buying platform.

Unlike Carvana, CarSaver does not own inventory. And unlike Carvana, CarSaver works with existing dealers. Which also means, unlike Carvana, CarSaver can sell new cars, not just used ones.

For credit unions, there is no upfront fee to use the platform. Instead it relies on a revenue-sharing model similar to indirect lending.

Rindone said the model is attractive to dealers as well as lenders.

“They’re getting approved buyers. This isn’t a lead; this is somebody who has gone through a buying process first, and a transaction,” Rindone said.

For dealers, that means they also have lower expenses for each sale.

Credit unions have built decades of trust with members as sources of fair loans at good rates. But when a member walks into a dealership, more than likely they emerge with a loan from another source. Banks have a similar problem.

“The retention rates for everyone are bad,” he said.

Rindone repeated the adage familiar to all lenders: “Members aren’t shopping for an auto loan; they’re shopping for a car.”

“We’re bringing the buying event and the borrowing event together on the CarSaver platform,” he said.

CarSaver is designed to handle all aspects of the process from shopping to even at-home delivery, if necessary. On top of that, Rindone said it has developed an “Automated Upgrades” program to maintain the relationship with buyer (and borrower) by identifying them when they might be ready for a new vehicle.

Credit unions approve marketing materials and strategy, but they don’t have to invent them.

“It is pretty turnkey,” he said. “When a member is eligible for an upgrade, they will run the campaign for the credit union. The campaign could even include a live phone call to a member.”