For more information:
Jess Noelck 608.665.7861
jess.noelck@cunamutual.com
Phil Tschudy 608.665.7188
philip.tschudy@cunamutual.com
MADISON, Wis. – As auto sales continue to boom, millions of subprime borrowers are entering the market for new vehicles.1 This presents a significant growth opportunity for credit unions to generate new loans while protecting and serving their members, attendees of CUNA Mutual Group’s sixth annual Discovery Conference were told today.
“Subprime customers took out $129.5 million in auto loans during the first 11 months of 2014, which represents more than one-quarter of all U.S. auto sales, the highest level since before the Great Recession,” said Steve Hoke, director of loan growth products for CUNA Mutual Group.2 “If you aren’t reaching out to your members and potential members with an auto loan offer at a competitive rate, then you are basically telling them to go elsewhere,” Hoke added.
Credit unions entering the subprime auto lending market need to:
·Reward Good Behavior
Provide members with an educational financial plan to teach best practices and build credit scores, so members are rewarded with more affordable credit in the long run.
·Mitigate Risk
Offer insurance options for members to protect their auto investment while mitigating risk to a credit union’s loan portfolio.
·Maximize Digital Technology
Utilize technology to instantly verify income and employment status. This will speed the underwriting process by indicating whether the member will be able to repay the loan.
·Recapture Existing Loans
Capitalize on member loyalty by reaching out to current members who have refinanced at an outside institution through a pre-qualified, auto loan recapture program.
·Leverage Mobile Technology
Increase direct loan activity by utilizing mobile apps. These apps allow members to research multiple vehicles, explore loan options and apply online. In return, credit unions reach tech-savvy members at the time of the purchase decision, manage the dealer relationship and provide quotes for insurance products. It’s a win-win situation.
“Our forecasts indicate approximately 35 percent of loan transactions on loanliner.com® will come through mobile in 2015 because members want to be able to interact with your credit union on the spot,” said Hoke.3 “Mobile lending not only engages tech-savvy members, it also leads to new opportunities to generate additional non-interest income for your credit union.”
Credit unions can learn more about subprime auto lending by viewing Hoke’s Discovery Conference session on-demand at cunamutual.com/registerondemand.
The Discovery Conference is an annual event sponsored by CUNA Mutual Group that attracts a national and international credit union audience of more than 1,300. The virtual, no-cost event is designed to give credit union leaders valuable industry insight and trends in the insurance and credit union industries. After the event, select content is available on-demand for attendees to leverage and share best practices through the end of the year.
About CUNA Mutual Group
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. The company offers insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStageTM – branded consumer insurance products; and investment and retirement services to help credit unions and members achieve financial security and success. More information is available on the company’s website at www.cunamutual.com.
