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Auto Loan Loyalty Stems From Good Customer Service

Anheuser-Busch Employees Credit Union (St. Louis, Mo.) and Assemblies of God Credit Union (Springfield, Mo.) recently participated in an auto loan report released by the Filene Research Institute.

Filene’s report showed that auto loan loyalty stems from intangible loan factors, such as good customer service, ease of contacting the lender and lender responsiveness, than from quantifiable loan factors, such as interest rates and down payment requirements.  

The “Predicting Members’ Choice of Auto Lender: Borrowing from Credit Unions or Elsewhere?” report and infographic, supported by a grant from Enterprise Car Sales, is Filene’s latest examination of the consumer auto loan market. Written by Luis G. Dopico, PhD, of Macrometrix with a foreword from Ben Rogers, research director at Filene, the report explores what factors predict whether members choose their credit union or another financial institution for their auto loans.

“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.”

Credit unions’ share of consumer auto loans grew from 13 percent in 1986 to 20 percent in 2011; however, 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 far more likely (by 41 percent) 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 credit unions and commitment to 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 substantially affect auto lender choice.