MADISON, Wis. The choice of and loyalty to a specific auto lender is driven more by intangible loan factors, such as good service, ease of contacting the lender and lender responsiveness, than from more quantifiable loan factors, such as interest rates and down payment requirements, according to a new report from the Filene Research Institute.
The report, “Predicting Members’ Choice of Auto Lender: Borrowing from Credit Unions or Elsewhere?” was authored by Luis G. Dopico, PhD, of Macrometrix, and explores what factors predict whether members choose their credit union or another financial institution for their auto loans.
The report notes that while credit unions’ share of consumer auto loans grew from 13% in 1986 to 20% in 2011, 24% of the 6,329 credit union members surveyed during the summer of 2012 still chose other lenders for their auto loans. According to the research, the best predictors of members’ choice of auto lender include more intangible aspects of the lender-borrower relationship in members’ past auto loans. Members placing more importance on customer service are far more likely (by 41%) to choose a credit union for their auto loans. Similar increases exist for ease of contacting the lender (40%) and lender responsiveness (38%), the study found. Interest rates and down payment requirements are far less useful predictors.
Members’ satisfaction with credit unions and commitment to credit unions in general has little effect on auto lender choice. The report also revealed that members overwhelmingly prefer electronic communications from their credit unions, but choice of media does not substantially affect auto lender choice.
The report was underwritten with support from Enterprise Car Sales.
