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Dealerships Leverage Credit Union Financing to Sell More Cars

  • by CUDL Team
  • December 6, 2023

With the average car price hovering at more than $45,000 and interest rates averaging between 6% and nearly 12%, dealerships need a broad lender portfolio to help borrowers find lenders that check all the boxes – those that are willing to lend, offer more affordable payments, and are considerate of unique financing circumstances.

Many traditional lenders have scaled back or cut auto lending in fear of delinquencies. Since sticker prices and monthly payments remain high, many banks continue to minimize risk by tightening auto loans.

What can dealerships do to get buyers into vehicles amidst a credit crunch? A strong strategy is to broaden your lender portfolio by complementing traditional bank financing with credit union partners on the CUDL credit union financing network.

Today’s credit unions pair much-needed affordable financing with advanced technology to fund more loans faster. The CUDL network of over 1,100 credit unions nationwide funded a record $59 billion in indirect auto funding in 2022. Learn why dealers are finding success by including CUDL in their lender portfolios to help sell more cars.

The credit union rate advantage

The average auto loan rate has reached highs not seen in 40 years. In the second quarter of 2023, the overall average auto loan interest rate was 6.63% for new cars and 11.38% for used cars, according to Experian’s Automotive Finance Market report.

While some buyers can wait out the market, others must purchase a vehicle now. That’s where credit union partners can come into play. On average, credit unions offer lower loan rates because profits go back to members, who are shareholders. Lower loan rates make cars more affordable, so dealers can continue to sell vehicles even in challenging market conditions.

Industry data backs up the credit union rate advantage. September 2023 data from S&P Global Market Intelligence reveals the average credit union rate for used vehicles with a term of 48 months was 6.23% compared to 7.07% for banks. The new vehicle rate with the same term was 6.05% for credit unions versus 6.69% for banks.

For today’s budget-conscious car buyers, even incremental savings can make a big difference. According to Edmunds, one percentage point increase adds roughly $20 a month to a car note and thousands of dollars extra over the life of a loan.

Lower interest rates are in part why credit unions continue to lead as the largest used lender type, with nearly 30% of the market in the second quarter, according to Experian.

Making monthly payments affordable

Affordability continues to be a top concern for borrowers. Although car prices have dropped slightly, they are still historically high. Experian reports that today, new vehicle prices top $48,000, and used hit more than $26,000.

Turning those numbers into affordable monthly payments often necessitates longer loan terms. Credit unions are focused on helping members and have more flexibility to offer loan terms as long as 84 months. For borrowers who need to buy, but are on a tight budget, a credit union is a smart choice to help your dealership serve this market.

Advanced technology to speed funding and sell more cars

When you have a loan package ready to go, you need a funding decision as fast as possible. Credit unions on the CUDL platform leverage technological advancements and integrations to fund loans faster and more consistently using automation and artificial intelligence (AI).

Credit unions on the CUDL platform are able to leverage AI-powered solutions that can transform the historically time-consuming and labor-intensive loan underwriting process. By automating routine tasks and optimizing for accuracy and fairness, credit unions are able to approve more loans faster, which in turn, allows dealers to deliver a better customer experience.

Advanced AI and machine learning are also powering CUDL’s Document Processing Automation (DPA) to provide a seamless experience for dealers from decisioning to funding loans. DPA revolutionizes the loan origination process by automating manual tasks so loan processing can be accomplished in record time. The result is fewer contracts-in-transit and an efficient funding process.

AI-powered solutions combine secure DMS and/or CRM integration along with electronic document upload and transmission for a faster, more streamlined processing time for your dealership.

Without the back-and-forth frustration of financing, you can keep the deal process moving forward and create better buying experiences for customers.

The most important road to success in this challenging market is to have a broad lender portfolio. A proven strategy is to complement your captive financing and banks with the CUDL credit union network. The network makes it fast and easy to find the perfect credit union for every borrower to obtain the best financing for every deal and sell more cars.


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