Why dealers should keep credit unions close

As vehicle costs and interest rates rise, it's worth a dealer's while to keep relations with local credit unions friendly, particularly in areas with high loyalty to credit unions.

Though they lack the incentives and programs that captive finance companies can offer, credit unions often have more flexibility on interest rates than other auto lenders. Because of this, credit unions can finance auto loans that could not be done elsewhere, assisting those customers who are particularly sensitive to interest rate growth.

Fighting against customers' loyalty to their credit union can impede dealers' goal of retaining customers. Fostering relationships with credit unions is key, and dealers would do well to meet with representatives at their local credit unions to assure them that the goals they have for their shared customers are aligned.

Credit unions have been wading further into the auto market in recent years. According to CU Direct, a platform of more than 1,100 credit unions, auto originations by credit unions that work with CU Direct increased 10 percent through September 2018. Together, the credit unions originated more auto loans than any other lender in the market, according to AutoCount and CU Direct data.

Getting along might not always be easy. Some credit unions urge customers to initiate deals at the dealership to take advantage of automaker bonuses before refinancing with them. Finance managers also try to get involved in deals early to ensure that a customer who may have financed directly with a credit union chooses financing through the dealership instead.

Dealers strive to do whatever they can to get their customer the best deal to retain their business. Credit unions have a similar goal to make sure their customer is taken care of.

Working together toward a successful middle ground is important for business and for the customers who drive it.