Five Ways You’re Losing Car Loans
I don’t need a crystal ball to predict that your credit union needs to make more loans. And of course that means good ol’ auto loans, mostly used car loans.
Free of charge, we’ll share five things you’re probably doing wrong with your car loan products, your member experience, and your auto loan marketing (just keep iDiz in mind when you’re ready to roll out that spiffy new campaign, OK?).
Fortunately, these are all fairly fast fixes, if you’re willing to make a few changes and think outside the same old boxes.
Marketing your Fantabulous Super-Duper Low Rate
Yeah, yeah, you’ve got a great rate. So does everyone else. But how many people know what that number really means? People looking for loans don’t actually care that much about rates.
Worse, did you know that a giant low rate is a giant “Keep Out” sign for a whole lot of people? Touting low rates tells people loud and clear you’re only interested in lending to people with flawless credit. “Yeah, but what’s the rate I’m actually going to get?” or worse, “Looks like I shouldn’t even bother.”
There are lots of messages that matter far more than the loan rate. Safety, speed, hope, care, and inclusion, for example.
Why so mysterious?
Your loan officers look at car loan apps all day. Most regular people only fill out an app once or twice a decade. But the cold hard truth is that applying for an auto loan is scary and unknown.
One part of the fix is easy: start your app by telling members up-front, in plain language, exactly what to expect. Don’t forget to put this information on your website, too, where it is easy to find.
Your car loan app is online, mobile-friendly, not too nosy, and really quick, right? Right? (Riiiiight…) But even then, people will have fears, worries and questions, and they won’t start filling out your app until they feel they have a good chance of success. What info and documentation will I need? How long will it take? When will I hear back? Who can I call (or text) if I have questions? What if I get rejected?
No Refi-magination
Sure, plain old refis are an easy way to poach loans from the competition and help members reduce payments. But there are a lot of other ways your members can use refis. Why not tell them more about the wonderful world of refi remixes, and all those OTHER reasons to move your car loan?
For example, a lot of people would totally be on board for an “Own it Sooner” refi, increasing their payment to pay off their vehicle six months or a year sooner. Or maybe some need a “Budget Stretcher” refi, adding a year to the end of a loan to lower the payment and get some much-needed relief.
Did you know tires for many common vehicles can top $1,000? Maybe a “Drive it Longer” cash-out refi for tires, repairs, or upgrades could make sense, especially with used car values so high. Target people two or three years into their car loan, and heading into winter with bald tires.
Every situation is different, but don’t be afraid to show off a little flexibility, imagination, and maybe even pizazz with refis and lending in general. This demonstrates just how focused you are on making your members’ lives better, and encourages them to come to the credit union for other solutions.
No First-Time Car Buyer’s Loan
Every CU we talk to wants two things: more loans and more young members. But very few bother to put these two problems together to create a solution, a car loan that actually works for young adults.
Tweak your underwriting and pricing, get to know your younger members, and come up with a bundle to solve their unique transportation problems.
For example, maybe you could put together a loan for older cars, bundled with breakdown protection and a low limit credit card for maintenance. Maybe you could throw in a free car seat or tool kit and a dose of financial education.
Just promise you’ll call it something more interesting than “First-Time Car Buyer’s Loan”, OK?
What we’ve got here is failure to innovate…
A car loan shouldn’t be a generic commodity, something you can get anywhere. Spice things up, add your own spin, and do things other lenders can’t. Solve specific problems for specific audiences.
As you can see with some of the examples above, sometimes that means updating tired old policies and processes. Sometimes it’s as easy as re-labeling or publicizing something you’re already doing, or bundling two or more services and slapping on a fresh label. Other times it’s thinking way outside the box, experimenting, and trying something totally new.
The good news is that innovation, even in plain ol’ car loans, is something any credit union of any size can do. Your superpower is that you know your members best. Meet them where they are with a fresh take on auto loans.
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