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.
Overall, finance provider satisfaction drops in 2006, primarily due to a broad-based shift in interest rates. Of particular note is the industry wide effect of the increasing Federal funds rate, which has caused all finance providers to increase their rates. The net effect of this increase is an industry wide decline in satisfaction.
Ford Credit ranks highest in the luxury lease segment for a second consecutive year, performing particularly well in provider offering. In the non-luxury lease segment, Ford Credit leads the rankings for a fifth consecutive year, receiving the highest ratings in provider offering and the application/approval process.
With strong performances in payment/billing and application/approval process, GMAC ranks highest in the luxury loan segment for a second consecutive year. GMAC also ranks highest in non-luxury loan satisfaction and receives the highest ratings from customers in three of the four factors that determine overall satisfaction: payment/billing, provider offering and application/approval process.
The study also finds that the use of electronic contracting (eContracting), which allows dealers to forego paper contracts by submitting an electronically signed document to capture customer signatures, has a positive impact on customer satisfaction. On average, customers whose contract was processed with eContracting technology are more likely to say they are "delighted" with their overall application/approval process when compared to customers who were processed with traditional documentation. In particular, the largest difference in satisfaction is in the ease of filling out paperwork.
"Currently, only 3 percent of customers report that their contract was processed using eContracting," said Lo. "While the current penetration is very small, this proportion is likely to increase soon. In our 2006 Dealer Financing Study, we found that 75 percent of dealers who currently use eContracting expect the number of contracts processed with this technology to increase within the next 12 months."
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