Report: Credit Unions Are Focusing More on Indirect Auto Lending
The study finds that at a growing rate, credit unions are forming alliances with dealers to offer new-vehicle financing, representing nearly 10 percent of loans being issued in dealerships -- up from nearly 7 percent in 2005 and 3 percent in 2004.
Now in its 11th year, the study measures customer satisfaction with the new-vehicle financing process. Four factors are examined to determine customer satisfaction with automotive finance providers: provider offering, application/approval process, payment/billing process and customer contact experience.
The study finds that at a growing rate, credit unions are forming alliances with dealers to offer new-vehicle financing, representing nearly 10 percent of loans being issued in dealerships -- up from nearly 7 percent in 2005 and 3 percent in 2004. Through the indirect lending channel, credit unions are providing more favorable rates, driven primarily by tax advantages gained from their non-profit status. They are also offering longer-term loans. These factors are particularly beneficial to consumers at a time of rising interest rates, as lower APRs and extended terms help to lower the cost of financing a vehicle.
"As the new-vehicle financing environment adjusts to increasing rates and compressed margins, credit unions are positioning themselves as strong competitors to the established captives, banks and independents, which is underscored by the fact that credit unions have historically provided excellent customer service through their very close, personal ties with their customers," said David Lo, senior research manager of automotive finance at J.D. Power and Associates. "From the dealer perspective, credit unions are currently competing primarily on their rates and terms. Captive providers still have a significant advantage in other offering related areas such as a more competitive reserve and overall compensation per deal."
Be the First To Comment
(Please read our comments policy first.)
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Topics:
Companies:
Related Resources
News
Analysis
Publications
Research
