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8 posts categorized "Auto Loans"

April 10, 2013

Let's cut down the theme song and get to the bar.


by Ron Daly

I used to love watching Cheers. A funny show with a great cast, Cheers lasted through eleven season, a female lead change (are you a Diane fan or a Rebecca fan?) and thousands of shouts of "NORM!"

Sometime in the middle of its run, Cheers cut down its theme song and opening credits ("Where Everybody Knows Your Name" is stuck in your head now, isn't it?) to get to the show faster. Why waste time? Squeeze in more show, a few more jokes, a couple more beers - don't bother with the song we all know the words to anyway. Get to the point. 

I bring it up because I just read a bit of ON Innovation by author Terry Jones. In it, he talks about how the nature of gathering information has changed. Customers are walking into buying situations with a heaping helping of information and prep. From the book: 

My realtor friend told me the other day, there is no such thing as a "First Showing" of a house anymore. "Every showing is a second showing as all my customers have whittled their list down online and have seen every house already!"

Customers no longer need you for information, they need you for advice! "Actually sir, this color looks better on you", "I drove this model for three months and got about 21 mpg, so that is what you can really expect".

Interesting. As information becomes more and more accessible, people spend more time reading and researching major purchases. It theorhetically makes a sale easier. Theorhetically.

But as a person who sells things and a veteran of the CU industry, I have to wonder about how effective "more information" really is.

Let's say I'm looking into a product. For argument's sake, let's say it's a power washer. I start by searching online for "power washers". It goes from there to Amazon, then to home improvement store websites. I look at reviews ("stars", average prices, write-ups, etc.) and then I check out prices across all the websites I've visited. If I can find any, I'll grab a coupon or two. If I'm convinced, I'll buy online. If I need to look at the whole affair in person, I'll head to the stores. I make my purchase, start power washing everything and, pretty soon, my house is sparkly clean. And my neighbor's house. And his boat. Okay, so I got carried away. 

But that's an item. That's not a credit union. 

If I'm shopping for a car loan, how do I make a choice? Is it anything more than rate? If I'm out hunting, can I read reviews of the bank or credit union I'm using? Do I start with my current lender and work my way out? Can I go "kick the tires"? And how much information can I really gather?

I take three notes away from this: 

  1. "The Best Foot Forward Approach" - Is the information people are collecting to make a purchase/account opening decision the most useful information? And how do you determine that? Getting feedback on the lending process is a great idea. Talking with members, making notes, figuring out where the hard-to-understand ideas are - that helps prevent confusion in further one-on-one advising situations. And speaking of "advising"...
  2. "What's Your Take?" - Are tellers and MSRs familiar with the experiences that drive a member's questions? How familiar are mortgage specialists with buying a home? Have they purchased one of their own? Experience is a great teacher and opinion does matter.
  3. "Tow the Line" - Is everyone in the organization on the same page when it comes to answering questions? Do they have all the most important information at hand? If they can't answer a question right away, how quickly can they get that answer to the member? Good training and a dash of technology can assure that members can get the right answer from anyone at any time and that a qualified representative can answer any lingering questions. 

So, no, don't bother with the full theme song. Get to the good stuff - answered questions, thoughtful advice and opinion, and, eventually, the deal.

And if making your way in the world today takes everything you've got, oughta go where everybody knows your name.

January 23, 2013

People Are Lending Directly to One Another…So What Are We Doing Here?


by Ron Daly 

Today on, I was drawn to an article titled "Beyond the Home Loan: What can credit unions learn from online crowdfunding platforms?" [Here's the Full Article.]

While the article doesn't spell out the overall lessons, there are a handful of examples. Good enough, I suppose, because it got me thinking - what are we missing? 

Credit unions, as best I understand them (and after 30+ years in the business, I can honeslty say I do), were created to give members a way to lend to and borrow from one another. They were created as an alternative to the system. Now, for consumers, it seems like we're just another part of that "system". 

Bank customers and credit union members know that good loans go to good paper. If you're trying to buy a home or a car and you have a good credit score, you won't need to look for too long to get what you need. But if what you're trying to do is create a movie about Linotype machines or start a small business selling weirdly-shaped candles, you'll likely go wanting. And for the people who have rough credit, quick, high-interest loans with fewer strings mean more than "relationships" with a bank or credit union. 

As far as peer-to-peer finance and technology goes, you're crazy if you don't go read "A Game of Leapfrog" by Brent Dixon. 

From the article, originally published on the CU Watercooler

But meanwhile, many credit unions still don't even offer online account opening. We're saddled by regulations. We're a weighty, slow-moving beast. We make excuses.

Consumer finance is not just begging for disruption, it's experiencing it. In a few short years, many traditional institutions will be passed over. Leapfrogged. It's easier to build than reform, and people are building.

So, what can credit unions learn from peer-to-peer finance today?

  1. Time to Re-evaluate the "People Helping People" Message -

    Everyone I talk to in the industry loves that phrase, but how many credit unions are interested in the proof of it? When a person lends to Kickstarter, they get a "thank you" in the form of a gift - maybe a version of the product the borrower is developing or a branded package of swag with the up-and-coming product or company logo. What's the "thank you" gift new members get at your credit union? A letter? A free pen? 

    Better yet, where are the booklets and brochures with member success stories? Show me the story of a member who joined and went from broke to flush thanks to the credit union. Show me the small businesses that have benefited from the CU's guidance. Those stories have got to be there. Otherwise, my fees and interest are going toward nothing, as far as I can tell.

  2.  Partner Big, Lend Small

    According to the article above, services such as Kiva and Fundly use proven tech platforms like Paypal and Amazon to process payments and securely move money to and from borrowers and lenders.  Why can't credit unions partner with tech providers for everything they need - better online banking and account opening, smart phone apps, tracking of the loan process, etc.?

    It's not that they can't, it's typically that they won't...or don't want to. Even when vendors provide all the due-dilligence and proven testimonials and case studies, credit unions will still look for ways to doubt results. Who does that help? Not the member, certainly, and not the loan portfolio.

    And look at the amounts certain people are requesting - $300? $500? They'll go to a payday lender before they walk through your front door, how is that a good thing? It's not because the money isn't expensive - the rates on these small, short-term loans are outrageous. But people see fewer barriers to entry. They don't know they're walking into a trap. Shouldn't being more accessible be a goal for every credit union?

  3.  Never Turn Away From Your Social Missions

    People value charity, philanthropy, benevolence - not because they're "trendy", but because they're the right thing to do. We know hundreds of credit unions that partner with great causes but rarely explain the depth and their level of involvement. Why shy away from talking about things like Credit Unions for Kids? Share the good news with more than just a parting shot in your newsletter - make it a cause that you champion, not just "support".

  4.  Play the Game, But Play to Win -

    Sure, LendingClub and are growing enterprises. But are they human enterprises?  Can they really lend and handle deposits the way you can? Are those prepay debit cards celebrities seem to love so much really a better alternative? The answer to all three of those questions is "no". 

    You can provide deposit insurance. You can provide security. You can provide convenience. You can do it all and, if you do it well, you can show everyone that you're not "just another bank" - you were facilitating "peer-to-peer" before it was cool. And you're still here now.

It's not just lending that's being overtaken by "the people" - it's debt forgiveness, too. The Rolling Jubilee raised half a million dollars, bought up thousands and thousands of dollars of debt from banks, and forgave it. These "gifts of forgiveness" went out to average consumers, bogged down by medical or educational debt, and told them their debt was forgiven in its entirety. 

Your average consumer now knows that there are multiple ways to manage one's money - there's the bank, there's the credit union, or there's "none of the above". 

We USED to be the way people loaned money to one, we're a hinderance. We get our "people helping people" status back by being adaptable, affordable, approachable, and dependable. 

Let's get to it.


July 13, 2011

The Most Hated Companies in the Country - How Do Members Feel About You?


by Ron Daly 

The American Customer Satisfaction Index (ACSI) released their findings on which companies were the "most hated" last week. Most of the companies on the list aren't a big surprise - you've got your airlines (Delta's number two for super high baggage fees), you've got your big banks (JP Morgan and B of A), you've got satellite/cable companies (Cox, DISH). But there were  a few surprises. 

Coming in at nine and ten were MySpace and Facebook, respectively. Most of the complaints and dissatisfaction were based on privacy issues. I'm sure Groupon will be on next year's list, given their recent spate of bad press. How interesting that social networks are considered "companies". Sure, they have a corporate structure, but I'm always surprised to think of them as anything more than places for people to hang out - it's odd to think that they're actual corporations. It's stranger, still, to think that people are so worried about "privacy" - typically, whatever information you put on Facebook is whatever information Facebook shares with people. If they were showing people your private messages or selling your email address to spammers, that would be something else. 

But the biggest shock was who was numero uno. PEPCO - Potomac Electric, the power company that services the Washington, DC area. They're the most hated company in the country and they only serve one fiftieth of it. When asked about the rating, PEPCO had this to say

"We at Pepco know we have work to do and we're doing it every day," the company said in a statement. "For us to be distracted by this kind of sensationalism would be counterproductive."

Which is a nice way of saying "whatever". 

Which brings me to credit unions. When's the last time you asked your members exactly how they felt about you? Have you done a simple survey, something like a NetPromoter Score evaluation with instant "low feedback" alerts? Do you have a rolling feedback survey set up? DigitalMailer can help with all of these endeavors. It's corny, but it's true - you can't manage what you don't measure. How about your funded loan process, OR loans that were approved by you, but the member turned down your offer? That kind of feedback measurement is perfect for those of you wanting to be the member's primary financial institution!

Measure now with a survey so you can manage the changes you'll have to make to stay competitive.  

Click here to email us and we'll give you $100 off any of our survey services! 

June 24, 2011

"Duh of the Week" Award: Bad communication can be bad for your health


by Ron Daly 

That's right, we know you've been itching for its's the DUH OF THE WEEK AWARD!

Cigarette makers learned recently that, starting September 2012, they would have to put pictures of the "effects of smoking" on cigarettes and tobacco products. These pictures are, to say the least, nasty looking. The point being that if the little black-and-white lettered warnings on cigarettes aren't enough to get you to quit, a picture of a stoma should do it. Maybe the legal forms attached to a loan should come with these as well...

This week's award goes to Ally. Read this story from the CU Collector website

Earlier this year, Linwood [Costin, the borrower] called Ally, formerly known as GMAC, to request skipping, or extending his truck payment for March. According to Teresa [Costin's Daughter] “He said when he called they told them they don’t usually skip a payment; they skip two,”, “He said, ‘That’s fine,’ and he sent the amount they told him to for interest.”...

...Unfortunately, unbeknownst to Linwood, Ally had already assigned his truck for repossession.

Teresa claims “He got very upset and asked what he needed to do to fix things,”

“The guy told him he needed to go to the closest Western Union and wire them $567.”

Reportedly, Linwood got off the phone and went to a Western Union office and wired the money due. Costins has receipts showing the made payments.

Teresa reports “He finished his shopping for that day, went home, and they came and took his vehicle anyways and has refused to return it,”

So upset was the gentleman from the story that he had a heart attack and was rushed to a nearby hospital. According to the article, doctors say the heart attack was probably due to stress, as Mr. Costin had no arterial blockage.

We've already heard of Bank of America seizing the wrong houses, but to date hadn't heard of anyone having a heart attack because of it. With so much business to tend to in collections and lending, it's not all that hard to imagine that mistakes like this happen...but please, please, PLEASE make sure you get the right person the first time, and if there's an issue, make sure you make up for it. 

To Ally's credit, they did return the truck with a full tank of gas and waived the next month's payment for Mr. Costin. We hope that Mr. Costin has a speedy and full recovery and that the folks at Ally fix up  their legal language to include a warning label of their own: 

Screen shot 2011-06-24 at 10.30.25 AM


February 03, 2011

Why would anyone go to a car dealer anymore?


by Ron Daly

Did you hear the news that January new car sales are up 15%.  And I’m happy to report that my family is one of the contributors to the rise in car sales. Yes, after two years of paying off debt and my wife driving a 2003 lease turn-in with over 100K miles, we decided the time was right to get her a new ride.

She researched models, read reviews, created our “price range” and even bravely test drove five cars without the intent of buying any of them. Her secret, telling the car salesmen that she still needed to test drive other models before deciding on the one she wanted. It only became a small white lie when she was down to the last one.

After the research, she found the exact car with all the options she wanted at a local dealer online. We went to the dealer and, after the sticker shock wore off, took the car for a spin.  Now for the fun part… we made an offer on the car. As we patiently sat there playing the haggling game for about and hour and half over price and trade-in, we both decided we should just walk away and left without her dream car.

Now, we are not ones to give up easily. We called the sales guy the next day and restated our offer which was politely rejected. Being credit union folks, we decided we’d take another approach and see if our Northwest FCU car locator service could find us a similar car or get the exact car that we test drove that weekend.

Get this – by noon the CU Manager had secured the exact car she was looking for, for $3,000 less than what we had offered the dealer on Saturday and Sunday. As for the trade-in, the dealer wanted to give $6,300, CarMax offered $7,000 and the CU Car Wholesaler that came on site at NWFCU wrote us a check on the spot for $7,500. (CU savings $3,500 so far). The car was then delivered to the credit union where a salesman picked up the loan check from NWFCU and gave my wife a tour of her new dream car in the CU parking lot. This entire process was FANTASTIC!

So my questions – 1) why would anyone go to a car dealer anymore and 2) if you offer this type of service, how well do you promote it? 3) Or get members to spread the word?

Car dealers scare me and frankly, the only person I like to argue with is my wife. As Northwest FCU  members we were saved money on the purchase and trade-in, got a great rate on the loan and had a hassle free experience. We are thrilled and telling everyone we know about the great service our credit union provided.  Spread the word… we love our credit union!


August 03, 2009

The World's Largest Demolition Derby


AKA - Cash for Clunkers - You know, it figures that just when I've finally convinced myself to take my old Nissan pickup truck in and take advantage of the new CARS program, they'd run out of money. It finally made sense to me when I did the math that I could get $9,000 on a Chrysler vehicle for the truck that I spent $11,000 on a lifetime ago. I was slowed down trying to figure out how my in-laws and neighbors were going to get mulch and make landfill runs in that new convertible Sebring my daughter had her eyes on (you truck owners know what I'm talking about).

C.A.R.S is a typical good news/bad news program. The good news is that "Cash for Clunkers" was/is a success. People across the country leapt at the opportunity to trade in their old cars for newer, more fuel efficient models. Mission accomplished! 

The bad news... "Cash for Clunkers" was/is a success. 

Continue reading "The World's Largest Demolition Derby" »

June 18, 2009

Free Market or Flea Market? Government Paying for Junkers

by Ron Daly

Have you seen those commercials for "mail us your gold" things? You put old jewelry in an envelope, mail it to these people, and they send you cash. Or so we're lead to believe the thought that people would pay handsomely for your bits of scrap metal.  

Now from "gold" to "old" in the next round of the government trying to boosting the economy. If your car was made after 1984 and gets 18 miles(or less)-per-gallon, you could qualify for an incentive under the "Cash-for-Clunkers" program from the Government of up to $4,500. Seriously. Click here for the WSJ article. The idea is to take people's old, low mpg vehicles and turn them into...well, what DO they do with traded-in vehicles? Scrap? Recyclables? Monster-truck rally? Is the goal to re-sell them to a developing country? We can't sell them here - that's half the point. Trying to drive up sales of new vehicles and defibrillate Detroit is the overall aim of the incentive. So, what happens? They take in old cars and you go buy a new one - presumably one with a high fuel-efficiency. For cars, it's 32 mpg and under $45,000 to get a $4,500 incentive. Small trucks need no price restriction, 23 mpg minimum for the $4,500. Large trucks have no price restriction and only have to get 17 mpg for the incentive. 

My predictions for this:

1) It'll go through, but it won't be much help in saving the car industry OR lessening our dependence on oil. 

2) The one place it might be good for automakers (with a focus on American automakers)? Maybe GM can move some Volts and Malibu Hybrids, two vehicles that are focused on reducing carbon emissions. 

3) Lambourghini is going to start classifying the Gallardo as an SUV 

4) While captive financing will be offered by the dealers, Credit Unions will start to find ways to capitalize on the program to make sure that the industry keeps its fair share of the auto loan pie. 

Anyone looking at this already? Share your thoughts.

December 22, 2008

Good for Credit Unions! CUs Beat Bush to the Punch


by Ron Daly 

Last week we brought word about the Michigan Credit Union League's "Invest in America" program (click here for our post, "UPDATE: Michigan Credit Union League offering $10 billion in auto loans"). In short, the program was built to offer low-rate car loans to people who wanted to purchase a GM vehicle in the midwest - with a focus on areas that are heavy producers of American automobiles. $10 billion was made available to back the loans and encourage credit union members to purchase an American car and help the troubled auto industry. 

The program has since increased from $10 billion in available loans to $20 billion. Not only is there more money to be lent, there are more cars to choose from (Chrysler's joined in) and greater incentives (as much as $1,000 up front). You can read the story from CU Journal by clicking here

It wasn't long after the last story broke that Congress passed the buck to President Bush, forcing him to give the auto makers $17.4 Billion in federal aid. The assistance came with non-binding stipulations for change and a mandate to prove viability by March of '09 (read all about it in the WSJ article - click here). 

Continue reading "Good for Credit Unions! CUs Beat Bush to the Punch" »