It's about changing your process, not buying expensive new technology.

The car loan we didn’t get at our credit union

Deposits are climbing and credit unions need to make loans. Mortgages are in high demand, but you need consumer lending to stay in balance. And that means car loans. New, and (mostly) used car loans.

So why are credit unions, even large CUs, still throwing away so many car loans?

Here’s my real-world, real-life, 100% true “member journey” through a car loan we didn’t get from our credit union. I don’t want to call them out specifically, but this is a billion-dollar-plus CU that shouldn’t be making these kinds of basic, but far too common, mistakes. 

Hurry up and wait.

My wife and I were sitting in Carmax on a Wednesday. She needed a newer car, and after some terrible experiences at “traditional” dealers, we found a car she liked online at Carmax, test-drove it, and she decided to buy it.

We wanted to finance through our credit union. After all, credit unions are largely how I make my living, and we’ve done all our business via our CU for a long time. We are incredibly, ideally loyal members. 

But the last time I got a car loan (which wasn’t that long ago), it took four days and two physical trips to the credit union 70 miles away to get it done.

Past mistakes linger. And I’m still not sure whether they were mistakes or just a bad process. We needed reassurance that things would be different, and details on how to proceed to buy this car today. 

I called the credit union to find out whether we’d be able to complete the financing that day, and… “Your call is very important to us. Please hold for…” I listened to ads for a few minutes and hung up.

Why couldn’t anyone answer the phone? Why didn’t they have a separate number or extension for lending questions? This could have been a two-minute conversation with a human.

Since all 250+ humans at the CU were too busy to pick up a phone, then why didn’t they have a page on their website to explain the used car loan process in more detail and set expectations? They did have a list of what you’ll need for a car loan. But it was a VERY long, unfriendly list… for example, do they really need things like income verification when they can see years of direct deposits? 

And do they have any sort of relationship with Carmax that might expedite things? No idea.

Putting your worst foot forward.

I checked the car loan rates on their website with my phone. Hmmm… not that great compared to the rates our credit union clients have been offering.

They do have a member loyalty rate discount program mentioned in the fine print, but only listed the base rates, with no mention of what level of discount might be available for a 2018 vehicle. What are the best rates, and exactly how do you get them? Will they beat rates offered by the competition?

Faceplant at the finish line.

Persevering, I tapped the online loan app link. It told me if I was a member that I needed to apply through online banking. Okey dokey… only there is no “Apply” link in online banking. Palm, meet forehead.

Rookie fumble. Seriously? By this point, we were out of patience, and worse, we had no confidence. Someone at that CU is probably wondering right now why they don’t get more online loan apps. Does anyone realize how well hidden it is? I just looked again and I can’t find it. Is it even there?

And again, I needed to know more about what to expect. How long would it take to fill out the application with my thumbs on a phone, and most crucially, would we get an answer immediately and be able to complete the purchase that day? I had to assume “no”.

Simple, slick, sold.

So we decided to see what Carmax would offer. In under two minutes, they had the added info needed and had approved her for financing at a rate well below the best rates available from the credit union. Simple interest, no prepayment penalties.

Sold. We were soon on our way.

I really do feel a little guilty, but I also feel like we gave it a good shot. We tried a lot harder than most members would have tried.  

Even pipsqueak CUs can do better.

Again, I’m not trying to be too hard on my CU specifically, but these kinds of things are far too widespread. My CU is too large to plead a lack of technology or budget, so I don’t know why they haven’t fixed their process.

The good news is that even if you don’t have the technology and budget for things like instant online approvals, there’s still a lot you can do with easily available information, human contact, and process improvement to fill those gaps. It’s about changing your process, not buying expensive new technology.

Just a few examples:

  • A fast, simple pre-approval process. Why not lock in loans before the member goes shopping?
  • Personal loan officers, or at least a separate lending number to call with questions.
  • More horn tooting. What are your BEST rates, and how do you get them? Will you rate match? How are you making things easier?
  • Stop being so mysterious about exactly how this all works and exactly what it’s like to get a car loan. Put more information about the process with tons of detail on your website. Just how long will it take to get approved and drive home?
  • Applying for a loan is TERRIFYING, even for people with excellent credit. Prepare your members for success. Overwhelm your website and your blog with information and details that answer their questions and reduce fear. 
  • What’s the exact, specific process for different specific large dealers in your area? If someone is planning to buy from Carmax or Carvana, or that megadealer on Main Street, what specifically should they know and do? Will you beat the rate? Do you have an indirect lending relationship, and exactly what does the member need to do?
  • Lend on weekends. Most people have to work on weekdays, so tons of cars are sold on weekends. So simple, but rare. Very few CUs will approve and close a car loan on Saturday or Sunday.
  • Eat your own dog food. “Dog-fooding” is the process of using your own products to ensure quality and to address problems your members might not have told you about yet. It’s fairly obvious no one at my CU has ever tried to use the online loan app.

Start mapping today

“Mapping the member journey” is the trendy phrase right now, but it’s an old concept. Collect those stories, anecdotes, complaints, and mine them for information about those sticking points.

Carefully think through every step of the process from the perspective someone who is actually trying to buy a used car. 

Use and test the process. Use secret shopping, or just find ways to simulate getting a loan from the members’ perspective. You’ll find surprises. 

It’s also quite likely you’ll find outdated processes and policies. Changing these leftovers is difficult, especially if they were intended to reduce risk, but missing out on interest income is also a huge risk.

And you absolutely need to understand what the competition is capable of, and be ready to counter it. Maybe you can’t make used auto loans as seamless as Carmax just yet, but there are always things you can do to smooth the ride.

Brian Wringer
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