CARMEL, Ind.-Credit unions often lose auto loans to dealerships without even knowing their members were looking, in part because the members didn't know, either.
Pete Hilger, president of Allied Solutions, a provider of technology-based insurance, marketing and lending products to financial institutions, said due to the emotional nature of a car purchase, someone simply getting scheduled maintenance on a three-year-old car can get talked into trading it in for a new one-and the credit union belatedly finds its loan is paid off and it never had a chance to compete.
"Credit unions need to look at their portfolios and market to keep themselves in front of their members," he said. "At 24 months into the loan, let the members know what the credit union can do for them. We are one of several companies that track auto loan portfolios for credit unions."
Hilger said if he was running a CU today, increasing loan volume would be his first priority as that would enable him to cross-sell other services and drive non-interest income. He said CUs need to have a sales culture across the organization to sell GAP, mechanical breakdown coverage and credit insurance/debt cancellation.
"I would expand the number of services members are using in the indirect channel," he continued. "The economy is picking up and there are more loans out there, but the challenge is to establish a deeper relationship with those indirect members. Historically the indirect member has a savings account and the car loan-no checking account, no credit card, so no sources of non-interest income. That needs to improve."
CUs also should look to recapture loans their members have at other FIs-in most cases at a higher interest rate-again with the idea of setting up opportunities for driving non-interest income, Hilger said.
