Five ways to make car loans interesting
Let’s face the facts: at most credit unions, car loans are kinda, well, boring. The old cliche is that auto loans are every credit union’s “bread and butter”, which is true. They’re pretty much all exactly the same, aside from “great rates” (which everyone says they have) and “fast approval” (which everyone offers). And that limited-time rate special isn’t exactly spine-tingling news, either. What if you could offer a vehicle loan with something really different, something interesting, perhaps even… exciting?
Buying a car is a big event in a member’s life. It’s exciting, it’s fun, it’s a shiny new vehicle – and it can also be terrifying, worrisome, and frustrating. What if I don’t get approved? What if the car breaks down? Did I get a good price?
There are a lot of big, big emotions in play here. If your vehicle loan can enhance the fun and excitement, and reduce the fear and frustration, that’s pure differentiation gold. Here are five ideas, free of charge, to help credit unions make car loans interesting – maybe even exciting!
Hoopty Auto Loan
Sometimes, people are at a place in life where they’re not in a position to buy a new or late-model car, but they also don’t deserve to get gouged by predatory lenders. How about a special auto loan with special budget-friendly rates and terms for older cars? We helped Diamond Lakes FCU do just that with their “Wheels2Work” loan, the “perfect loan for imperfect cars”, and it was a big hit.
It’s also a great opportunity to sneak in some financial education, and help these members build savings toward their next car.
Flexy Flyer Car Loan
Signing on the line for a car loan is pretty scary; you’re committed to four or five years of making a payment every month. What if you could reduce that fear with a built-in skip a pay option?
Here’s how it could work: let’s say a member applies for a five year (60 month) car loan. Set it up as a 55 month car loan, then give the member the option to skip one payment a year, whenever they like. If they don’t need to skip, congrats – they’ve paid off their car early! But throughout the loan, they had the peace of mind that they could skip if they needed to stretch their budget that month.
Car Care Reserve Loan
In its simplest form, this could be a car loan bundled with a credit card with a set limit that could be used for repairs, maintenance, tires, etc. The card could terminate or convert to a regular credit card after the car loan is paid off.
Or, perhaps you could roll in a special savings or checking account used to pay for insurance, plates, repairs, tires, maintenance etc., similar to an escrow account used with a mortgage; part of the payment every month would go into the account with the amount available for all those other expenses of driving.
Targeted Vehicle Loans
People love to personalize and have fun, so why not start offering “Tuff Truck Loans”, “Mom’s Taxi Loans”, “Family Truckster Loans”, “Dad’s Little Red Sports Car Loans”, and even “Grandma’s Go-Devil Loans”? You could even bundle these with different fun incentives or services to create buzz and interest. For example, a “Tuff Truck” loan could come with a book of car wash vouchers for all the mud, or “Mom’s Taxi” loan could come with a car seat or seat covers.
Each segment of vehicle buyers is very different, so targeting them separately with different pitches and different labels for the same basic product makes a lot of sense.
Car Plus Loan
This could be sort of a loan “bundle” targeting all the things people do with their vehicles. For example, if someone buys a truck, maybe their “plus” would be a boat, or maybe an ATV with a trailer. If it’s a minivan, maybe they’d like to add a utility trailer. SUV buyers might use a vacation loan to load up the kids and hit the road. EV buyers might need to add a charger in their garage.
Another twist could be related to the “Hoopty Loan” above; if someone buys one of those “imperfect” cars, there’s an opportunity to finance new tires and repairs to get it safe and up to snuff.
Go ahead, get different
Car loans don’t need to be boring. You know your members best, and there are plenty of untapped opportunities to get creative with auto loans that amplify the fun, reduce fear and frustration, and build buzz. Auto loans really can be interesting!
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