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Credit Union Auto Loan Loyalty Stems More from Good Customer Service, Less from Interest Rates
Tuesday, May 21, 2013 6:25 AM

A new report released from the Filene Research Institute reveals that auto loan loyalty stems from more intangible loan factors, such as good customer service, ease of contacting the lender and lender responsiveness, than from more quantifiable loan factors, such as interest rates and down payment requirements.

“This research provides insights to help credit unions maintain and grow their auto loan portfolios,” said Brooke Gilchrist, national business development manager for Enterprise Car Sales. “With 14.8 million units sold at the end of 2012, auto sales are creeping back toward pre-recession levels. Credit unions can and should take advantage of this expanding market.”

While credit unions’ share of consumer auto loans grew from 13 percent in 1986 to 20 percent in 2011, 24 percent 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 41 percent more likely to choose a credit union for their auto loans. Similar increases exist for ease of contacting the lender (40 percent) and lender responsiveness (38 percent). Interest rates and down payment requirements are far less useful predictors.

Members’ satisfaction with their credit unions and commitment to their 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 doesn’t have a substantial effect on auto lender choice.