Sept. 17, 2025

Riding the Refi Wave: How Credit Unions Can Capture the Moment

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Auto loan rates are high, millions of borrowers are rate-locked, and a refinancing wave is on the horizon. In this episode, co-hosts Lynn Sautter Beal, Drew Megrey, and Barry Roach break down why credit unions are uniquely positioned to win the auto refi surge. They dig into smarter underwriting, targeted outreach, and the fintech tools helping CUs capture opportunity at scale. This isn’t a “wait and see” conversation; it’s a roadmap for owning the next big lending moment.
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Only large credit unions can compete in the auto refi space.

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Capital at fiction. Yes, there will be a surge coming

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once rates come down. I think the question is when

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a rate's going to come down.

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A lot of people don't necessarily know about can you

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refinance or auto loan? Like it still seems like there's

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a little bit of education out there.

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You think the consumer even knows what their rate is?

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Most often probably not they know what the payment is.

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Welcome to leaders in lending. This episode was recorded in

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mid August, so some of the content today is subject

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to change. Today we're going to talk about this auto

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refinance surge that could be coming. Right. The FED really

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hasn't moved rates for quite some time now, but there's

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talks depending upon which paper comes out each week of

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when they will reduce the FED rate. So there's this

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refinance surge that could be coming. Is this asset category

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is near and dear to credit union? So I would

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love to get your post perspective on what is driving

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that outside of you know, the FED potentially reducing rates.

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Is it we're already in a refinance crunch or is

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it coming? How are we going to support it? So

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i'd love to get your perspective on when it's coming

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or is it already here?

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Sure? Did you intentionally say driving by the way because

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we're talking about a noun anyhow, So you're right, Drew.

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It's been about a year since we last saw a

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FED fund's decrease. In fact, we saw three decreases the

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last year of one hundred basis points total. And what

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did that do to the interest rate environment? I mean,

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the market didn't change at all. In fact, if you

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look at the tenure rate today is roughly the same

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as what it was two years ago. So that tells

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me that we haven't necessarily seen any sort of change

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in auto loan rates in the past two years. And

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yet the majority of originations and auto loans have been

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in some time between now and say, the last three

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four years. So yes, there will be a surge coming

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once rates come down. I think the question is when

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a rate's going to come down, Because those last three

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rate cuts really didn't have any impact on the interest

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rate environment. I don't know if the ones that are

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contemplated this fall, with everything else going on in the economy,

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are really going to have that intended effect on loan

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rates as well.

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Yeah, and I definitely think that you know, we all

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saw during obviously during COVID what happened to the auto markets,

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and you know that new cars were hard to find,

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use cars sold at increasingly high prices. And I think

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that what we've been seeing then in the last few

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years is more new cars are actually the ones that

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are being financed while they're now back available. There's less

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use cars available, and so people are generally then going

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through a dealership buying a new car, and so may

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have loans that are more attracted or refinance and a

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car that has taken less depreciation over time because it's nowhere.

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That's a good point, you know, around the new cars

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the evaluations are holding three four years ago. I remember

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in our Credit Union looking at these new auto loans

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coming through because they were overvalued used cars just because

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there was less supply available, and thinking, how are we

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going to collect on this in three or four years

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given more values were at the time. And I think

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that sort of happened, is that valuations dropped so much

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for used vehicles in the past three four years that

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doesn't necessarily have as much of an impact. Now, now

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what that means from an auto refive perspective for those

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loans that were originally two three years ago is you're

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going to have to really be very clear on valuations

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and if that makes any sort of change your policy

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around the loan to value that you be willing to accept,

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or if that impacts your pricing in some way, if

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you want to have some sort of a premium placed

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on that high loan to value auto.

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On It's a near and dear subject to my heart

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because about not quite four years ago, I had one

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of my children got her driver's license and we had

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to buy her a car in the midst of historically

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high used car prices. And now my youngest is about

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to turn sixteen, and things look much better in the

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middle one, maybe a little jealous of the youngest is

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going to get potentially a nicer car that's a lot

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less money, a brand new car maybe most likely a

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brand new versus a couple of years old.

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So on that, Linn, you touched on that. The in

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the auto space right now, there's more new vehicles that

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are being purchased at dealerships. It's no longer kind of

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this used versus new type of mentality. If you think

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about though, people that got into a car such as

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there they bought their daughter a vehicle or so. The

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rates that they were offered back then were decent in

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a sense, probably somewhere between the high sixes mid eights,

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depending upon credit quality, things of that nature. But the

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newer vehicles that they're now selling are much higher trim packages,

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higher payments at aprs right now that are still fairly high.

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What do you think moves the needle for people to

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go back to purchasing new vehicles or refinance there existing?

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And how many basis points does the FED reducing Does

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it make sense for them to go into a comfortable

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payment if they were to buy a used or versus.

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New, Yeah, I mean in a refin deal if there's

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no other sort of fees associated with it, and typically

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there aren't. If I can reduce my payment by twenty

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five dollars, why wouldn't I do that? You know, if

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I'm able to even stretch out the term a little bit.

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Your cars are lasting a lot longer now too, right,

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So what's the average age of vehicles on the road

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right now? It's over ten years just because quality I

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think is way better than it was a generation to go.

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So maybe I'm willing to extend that term out a

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little bit in order to get a little bit of

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a lower payment, even if my rate isn't necessarily all

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that different.

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Well, I certainly know. I know on one of our

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prior episodes, we had some of the folks from Experience

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on who specifically lead their auto market in the credit

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report and credit scoring area, and they're seeing a lot

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more of that, like those longer terms, that people are

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taking a longer term now, whether or not they hold

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that car for very long, they're willing to take a

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longer term in exchange for a lower payment, And I

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think that is a big focus at payment versus rate

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is ill for most people the biggest number that they

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look at, even though the rate long term can mean more,

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but it depends how long they're going to keep that car,

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or if they're going to trade it in in three years,

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or they plan to actually.

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Pay it off.

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Our Credit Unis even did ninety six month loans for

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new vehicles, and we could even charge a little bit

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of a premium for that ninety six month loan and

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make a little more yield off its So and what's

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stopping you from doing that? In the refine market, you

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can do the same sort of pricing approach and take

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a few more basis points to make that to improve

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the profitability.

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Of the product. The refied surge is coming. We're kind

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of aligned there. You think about the macro though right

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now inflation, who knows. Delinquencies are up across all different

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asset classes. But for people that are coming through in

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this refinance surge, and this being the bread and butter

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of credit unions of auto lending, do you think they're

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going to have tighter policies? Is going to be more

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of an open book with valuations and terms so on

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and so forth. What are your general thoughts on how

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tight things become or is it going to be kind

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of an open book.

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I'm really interested. I'm really interested in Barrie's answer on this.

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But you know, I know, particularly with tariffs as we were,

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you know, they've been on again, off again, on again,

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off again. As it relates to cars, as it relates

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to it to automotive parts, there was a surge of

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new car purchasing that happened towards the enda last year

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earlier this year, and where people were probably buying ahead

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of when they really wanted to buy a car because

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they were afraid that if I wait six months or

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three months even this car is going to cost me

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thousands of dollars more than if I buy it right now.

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And you saw dealerships out there pushing that too, saying, hey,

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buy what's on the lot right now, no tariffs on

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these vehicles. And so I do think you have a

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lot of people who probably paid more and took higher

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rates than they would have because they were worried about

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the macro changing. And so doesn't really kind of answer

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that specific question, but something I'm thinking about just in

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general about the macro environment.

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Yeah, we're going to see how resilient the American consumer

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is with this. The cost of tariff's going to be

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passed on to the buy or are the manufacturers and

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the dealerships eating a bit of that? And if so,

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then doesn't that mean it that we might see the

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return of zero percent for seventy two months at some

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of the captives and so on. So I'll say that

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the macro could fundamentally shift a lot of the demand

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for auto loans, maybe even away from banks and credit

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Unis that's possible. It's kind of a wait and see attitude.

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I think what you do need to have, though, is

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a very flexible policy and a very flexible pricing structure.

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You know, we used to set and forget it auto

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loans when rates didn't move all that much, and that

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was the wrong approach then. I think it's really the

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wrong approach now. I think you've got to be so

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on top of what's happening in the marketplace, what's happening

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with consumer behavior, and make sure that the loans you're

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bringing on are actually going to be profitable for your program,

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and maybe you make that choice to not try and

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be as competitive in the marketplace. I was talking to

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a ANY partner last week in Texas and they're just

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seeing where in a very highly competitive, large metropolitan market,

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they just couldn't see a way that they could remain

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competitive in that aut alone space. So they've actually backed

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out a little bit and they're doing a lot more

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sort of internally with their own membership because they're a

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fairly large credit union, but they're not chasing a lot

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of that indirect business today. That doesn't mean that's going

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to be that way a month from now or even

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two weeks from now, but they've made that conscious decision

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we're not going to chase rate right now, with valuations

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perhaps being a little higher than what they would be

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the residual value if it ever did come to repo.

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Well, maybe that's a good opportunity for them on REFI though,

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right that, if they're not going to chase rates on

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indirect they could potentially, though, make that deal on refi.

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You've got some payment history on the same car, you

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could offer a better rate there. And I do think

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it's just a product that a lot of people don't

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necessarily know about too, is that can you refinance your

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auto loans? Seems like there's a little bit of education

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out there.

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I think some people do know that, right. I have

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a really good example. A friend of mine purchased a

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vehicle back in January the tariff unknown right, walked out

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of their super prime borrower with probably a nine percent

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type of APR. Knew he could refinance that, of course,

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but he just wanted to get that trim package of

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that color off the lot that day. Then was able

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to refinance, you know, fifteen thirty days later at much

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more favorable types of terms. Do you think there's a

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lot of consumers out there that are knowledgeable that they

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can go do that because credit unions, of course offer

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somewhere between two three hundred basis points lower than what

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they're offering in the dealership.

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There's danger with that approach, though, right, I mean, how

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many people do you know got into houses thinking oh,

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yeah this is the howth that wanted? Yeah, yeah, Rechel

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turn this is six and a half.

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Value will stay the same.

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But right, and where are we now? You know, thirties

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are still above so we haven't seen a thirty above

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or below six percent in quite some time, right, And

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or maybe things change for their financial profile. Now you're

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not as super prime as as you were before. So

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I think that is a bit of a risky proposition

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to answer your question, Drew, though, yes, I think there

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are there's a segment of borders that that inherently understand that.

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And in your friend's case, he's like, no, this is

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one I want. I'm not gonna wait. I'm going to

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get it now while I can, because who knows that

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that particular model with that trim package is going to

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be available when I'm ready to pull the trigger six

241
00:11:21.600 --> 00:11:22.600
twelve months from now.

242
00:11:22.600 --> 00:11:24.399
On that going back to a point that you made,

243
00:11:24.399 --> 00:11:27.440
Barry that credit unions are kind of pulling out of

244
00:11:27.480 --> 00:11:31.720
the interrex space not chasing rate. However, credit unions are

245
00:11:31.759 --> 00:11:35.240
now matching market share of that of banks. Why do

246
00:11:35.360 --> 00:11:38.799
you think that is if they're not chasing rate knowing

247
00:11:38.840 --> 00:11:41.519
that credit unions have more competitive rate offerings because they're

248
00:11:41.559 --> 00:11:43.960
more member based rather than shareholder base.

249
00:11:44.120 --> 00:11:46.600
Yeah, I'll say, look, some have made the choice to

250
00:11:46.879 --> 00:11:49.279
maybe not chase rates, whereas for others it's the bread

251
00:11:49.279 --> 00:11:52.360
and butter, and it's sort of a maybe a fundamental

252
00:11:52.399 --> 00:11:56.159
or the primary product that helps them front a profitability.

253
00:11:56.240 --> 00:11:58.080
But look, you and I know from our credit union

254
00:11:58.080 --> 00:12:00.840
experience that you may not necess really make a whole

255
00:12:00.879 --> 00:12:03.960
lot of profit off of the loan itself. It's those

256
00:12:03.960 --> 00:12:08.080
add on products, it's gap, it's it's the mechanical breakdownsurch

257
00:12:08.200 --> 00:12:12.679
things like that that in an indirect relationship for the

258
00:12:12.840 --> 00:12:14.960
for the credit union, that's where I think the real

259
00:12:15.039 --> 00:12:17.440
value comes from. And then of course, now you've got

260
00:12:17.440 --> 00:12:19.600
that brand new member that you can maybe sell that

261
00:12:19.679 --> 00:12:20.759
second third product to.

262
00:12:20.840 --> 00:12:22.840
As well, or you can start them out with a

263
00:12:23.600 --> 00:12:27.480
personal loan and then refiy their auto into a better deal.

264
00:12:27.679 --> 00:12:33.399
Now to get to that which is first and second, Yeah, sure, definitely, definitely,

265
00:12:34.279 --> 00:12:38.159
all right, so thinking about this surge of auto refinance demand, right,

266
00:12:38.200 --> 00:12:41.120
we've heard this for the past two or three years,

267
00:12:41.159 --> 00:12:44.080
this this l word of liquidity and it being an

268
00:12:44.120 --> 00:12:47.039
issue for credit unions and even in banks. In some aspect,

269
00:12:47.480 --> 00:12:50.000
things are starting to come back in line, but we

270
00:12:50.039 --> 00:12:53.879
still hear quite often that there's liquidity pressures and concerns.

271
00:12:54.440 --> 00:12:56.080
If we have this surge of demand, how do you

272
00:12:56.080 --> 00:12:57.440
think credit unions are going to be able to take

273
00:12:57.440 --> 00:12:59.279
their capital and put it to work, or they're gonna

274
00:12:59.279 --> 00:13:01.679
have different avenue of being able to going back to

275
00:13:01.720 --> 00:13:04.480
no pun intend to drive additional auto loan growth.

276
00:13:04.639 --> 00:13:07.120
Liquid is still a concern out There's certainly not like

277
00:13:07.159 --> 00:13:10.200
it was two years ago after some a couple of

278
00:13:10.240 --> 00:13:14.799
spectacular bank failures that occurred. Like when you're seeing in

279
00:13:15.519 --> 00:13:19.120
that Lending Professionals chair, there's a little bit of a

280
00:13:19.120 --> 00:13:22.480
hope of a prayer that perhaps if you if you

281
00:13:22.519 --> 00:13:24.799
come to an inflection point in your balance sheet, that

282
00:13:24.879 --> 00:13:28.559
you're able to either bring new deposits in at a

283
00:13:28.600 --> 00:13:31.480
lower rate, or perhaps fed funds rates are a little lower,

284
00:13:31.519 --> 00:13:35.240
so your boring costs are a little bit less. My

285
00:13:35.360 --> 00:13:37.639
credit unions we tended to maybe take more of an

286
00:13:37.639 --> 00:13:39.799
approach of let's try and get as much as we

287
00:13:39.840 --> 00:13:42.600
can now at what rates that we feel are going

288
00:13:42.679 --> 00:13:46.200
to be meaningful and desirable for the credit union, and

289
00:13:46.320 --> 00:13:48.759
sort of worry about how to sort of fund it

290
00:13:48.759 --> 00:13:51.000
after knowing that you can sort of turn that spigot off,

291
00:13:52.039 --> 00:13:54.200
especially on the indirect On the direct side, it's a

292
00:13:54.240 --> 00:13:56.679
little more difficult. You want to have you want to

293
00:13:56.720 --> 00:13:59.519
have dollars available for those direct members who are coming

294
00:13:59.519 --> 00:14:02.559
to you. They want to deal with with your institution

295
00:14:02.720 --> 00:14:05.519
for an auto loan, so you better make sure we've

296
00:14:05.519 --> 00:14:08.080
got some dry powder to be able to fund those.

297
00:14:08.440 --> 00:14:13.639
Yeah, And I definitely think the efficiency of underwriting products

298
00:14:13.679 --> 00:14:16.840
like auto refy is helping, right, Like the cost of

299
00:14:16.840 --> 00:14:20.519
customer acquisition isn't as high with digital channels that you know,

300
00:14:20.600 --> 00:14:24.360
kind of cost per funded loan to convert a REFI application,

301
00:14:24.559 --> 00:14:27.039
particularly if you're partnering with a vendor that can offer

302
00:14:27.080 --> 00:14:30.639
a digital experience and you know, remove as much kind

303
00:14:30.679 --> 00:14:35.559
of manual intervention with both the refi, the retitling. The

304
00:14:35.639 --> 00:14:39.639
increase of electronic lean and titling in states and how

305
00:14:39.679 --> 00:14:43.080
that's continuing to grow, whether it's electronic leans or whether

306
00:14:43.120 --> 00:14:47.879
it's EEno rise and remote online notary sorts of services

307
00:14:48.279 --> 00:14:51.279
that the cost to originate each whetherether it's an indirect

308
00:14:51.320 --> 00:14:54.080
loan or a direct loan or or an auto refinance.

309
00:14:54.120 --> 00:14:58.559
I think the cost to originate each loan is depending

310
00:14:58.559 --> 00:15:01.559
on how you're doing it, concern be declining and on that.

311
00:15:01.600 --> 00:15:03.480
When you think this, when you think of when this

312
00:15:03.639 --> 00:15:06.840
surge does come from an operational perspective, you have to

313
00:15:06.919 --> 00:15:10.519
probably put more FTE towards all the operational pieces of

314
00:15:10.600 --> 00:15:14.120
lean transfer, payoff things of that nature. Right to credit unions.

315
00:15:14.399 --> 00:15:16.480
Are they going to automate that in some fashion through

316
00:15:16.519 --> 00:15:18.639
third party vendors? Are they going to have to hire

317
00:15:18.919 --> 00:15:21.159
more staff to be able to support this? What's the

318
00:15:21.240 --> 00:15:23.279
overall cost going to look like from that perspective with

319
00:15:23.399 --> 00:15:26.879
third party vendor versus you know, in in office staff

320
00:15:26.919 --> 00:15:27.320
in house.

321
00:15:27.600 --> 00:15:29.080
Yeah, And I think it's one of those things that

322
00:15:29.080 --> 00:15:30.679
you know, we've talked about a lot with a variety

323
00:15:30.720 --> 00:15:32.879
of other products, like you can certainly choose to partner

324
00:15:33.320 --> 00:15:35.080
to do that. I mean, you don't have to build

325
00:15:35.120 --> 00:15:38.000
it all yourself, but if you are building it and

326
00:15:38.039 --> 00:15:39.799
running it in house, you can theoretically do it with

327
00:15:39.879 --> 00:15:41.399
less people than you would have had to do ten

328
00:15:41.480 --> 00:15:45.200
years ago, you may not have the need to, you know,

329
00:15:45.360 --> 00:15:48.799
vault paper copies in office, but there's any number of

330
00:15:48.919 --> 00:15:51.000
vendors that they could partner with at this point, even

331
00:15:51.039 --> 00:15:54.519
if you're doing the originations yourself to do that electronically

332
00:15:54.519 --> 00:16:00.720
and transfer, titling, maintenance, middleware solutions, ELT vendors specially that

333
00:16:01.240 --> 00:16:03.799
know the rules in various states, especially if you have

334
00:16:03.840 --> 00:16:07.320
a national footprint and you know that you know, Michigan

335
00:16:07.600 --> 00:16:11.120
just switched to take E notary and now you know

336
00:16:11.159 --> 00:16:14.240
they used to require a paper signature. Those sorts of

337
00:16:14.440 --> 00:16:18.759
very specific even county specific rules sometimes get very nuanced,

338
00:16:19.519 --> 00:16:21.120
and so I think, like you really have to make

339
00:16:21.159 --> 00:16:24.200
that decision. Do you want to build and staff for

340
00:16:24.320 --> 00:16:27.039
all of those things and then try to monitor all

341
00:16:27.039 --> 00:16:29.840
of them or is that a better option to partner

342
00:16:29.879 --> 00:16:33.240
with a vendor who who does that as their kind

343
00:16:33.279 --> 00:16:34.159
of core competency.

344
00:16:34.360 --> 00:16:39.360
Yeah, ten years ago that was people systems tasks, then

345
00:16:39.559 --> 00:16:42.600
auditing of that right the whole risk management compliance elements

346
00:16:42.639 --> 00:16:45.960
of it, and now those resources can be allocate for

347
00:16:46.240 --> 00:16:51.320
other operational aspects of the the lenning relationship. It's not

348
00:16:51.399 --> 00:16:54.080
to chase down titles, it's not to deal with DMV

349
00:16:56.039 --> 00:16:58.519
it's no longer necessary in some of these states.

350
00:16:58.159 --> 00:17:00.840
And that speed gives the member of good experience of

351
00:17:01.759 --> 00:17:04.519
refinancing my loan. Do I make my payment with this

352
00:17:04.759 --> 00:17:06.720
banker credit union that I already had my loan with.

353
00:17:06.880 --> 00:17:09.440
Now I know that things are happening much quicker, and

354
00:17:09.519 --> 00:17:12.119
you're just more comfortable going back to the whole point

355
00:17:12.160 --> 00:17:14.640
of this surge coming and having the capital. What are

356
00:17:14.680 --> 00:17:16.440
your thoughts. I know we talked a little bit about

357
00:17:17.079 --> 00:17:20.519
kind of margins being very thin with captive rates. Do

358
00:17:20.559 --> 00:17:24.319
you think most credit unions or many credit unions are

359
00:17:24.319 --> 00:17:27.400
going to try to off what's on balance sheet right now,

360
00:17:27.480 --> 00:17:31.400
not yielding much from a sale perspective, participation perspective, and

361
00:17:31.440 --> 00:17:35.079
then front loading with these higher aprs than what they were,

362
00:17:35.160 --> 00:17:36.720
you know, two or three years ago. Love to get

363
00:17:36.720 --> 00:17:39.119
your perspective on is that kind of a combo of

364
00:17:39.480 --> 00:17:40.559
a capital mix or.

365
00:17:40.880 --> 00:17:44.720
I mean, that's a great strategy if your liquidity challenge

366
00:17:44.839 --> 00:17:48.240
it's a it's an excellent strategy, especially in that case.

367
00:17:49.240 --> 00:17:52.480
You know, a lot of consumer lending professionals I think

368
00:17:52.559 --> 00:17:54.599
sort of look at the like, I've got that loan,

369
00:17:54.599 --> 00:17:55.960
I don't necessarily want to give it up.

370
00:17:56.640 --> 00:17:56.720
Not.

371
00:17:56.960 --> 00:18:01.160
Many are sort of churning their folios in a way

372
00:18:01.240 --> 00:18:04.440
from both a risk management and a pretty management perspective

373
00:18:05.319 --> 00:18:07.599
to sort of make sure that what's on the balance

374
00:18:07.599 --> 00:18:11.279
sheet is really sort of hitting what the income statement

375
00:18:11.319 --> 00:18:14.400
requires right now. I think that's that's kind of an

376
00:18:14.440 --> 00:18:19.400
elevated approach that all credit us should be considering because

377
00:18:19.440 --> 00:18:24.279
there's certainly a market for it. While some creditings professionals

378
00:18:24.279 --> 00:18:27.200
that I've spoken to are having no problem with growth

379
00:18:27.200 --> 00:18:31.279
this year, twenty five has been abundant for auto loans.

380
00:18:31.279 --> 00:18:33.559
In fact, in some cases they're like, no, no, we're good,

381
00:18:33.599 --> 00:18:35.000
We're way ahead of planning.

382
00:18:35.039 --> 00:18:37.680
Wow, m Q one teriff unknown Right.

383
00:18:38.119 --> 00:18:40.160
Well, maybe, and so maybe that was part of it

384
00:18:40.200 --> 00:18:43.839
why there was a bit more demand. And you know,

385
00:18:44.000 --> 00:18:46.680
creditings traditionally, as you get into third and fourth quarter,

386
00:18:46.720 --> 00:18:48.720
it's like, gee, we should pack our balance sheet a

387
00:18:48.720 --> 00:18:51.440
little bit more. So, let's get out and buy some

388
00:18:51.480 --> 00:18:53.640
of the secondary market. And the secondary market always gets

389
00:18:53.640 --> 00:18:55.759
a lot more active sort of in the second half

390
00:18:55.799 --> 00:18:59.640
of the year. But yeah, I think that strategy, Drew

391
00:18:59.759 --> 00:19:01.200
is a really really sound one.

392
00:19:01.279 --> 00:19:04.000
Well, if today's episode got you thinking differently about auto

393
00:19:04.039 --> 00:19:07.359
REFI connect with myself, Lynn or Berry on LinkedIn. We're

394
00:19:07.400 --> 00:19:09.920
always up for continuing the conversation and hearing how credit

395
00:19:10.000 --> 00:19:13.480
unions like yours are putting ideas into action. All right,

396
00:19:13.519 --> 00:19:15.839
it's time for factor fiction, where we're breaking down real

397
00:19:15.880 --> 00:19:19.039
opinions about auto refinancing and deciding if we're on board

398
00:19:19.119 --> 00:19:19.359
or not.

399
00:19:19.440 --> 00:19:19.519
So.

400
00:19:19.680 --> 00:19:23.759
First question, there's probably some differences of opinions here. Only

401
00:19:23.880 --> 00:19:27.079
large credit unions can compete in the auto refi space

402
00:19:27.440 --> 00:19:28.920
capital f fiction.

403
00:19:29.799 --> 00:19:32.400
It's a little harder and new and used auto. Let's

404
00:19:32.440 --> 00:19:35.279
be honest in the indirect space, at least, you know,

405
00:19:35.720 --> 00:19:38.880
in my foreign geographic mark in southern California, there were

406
00:19:38.920 --> 00:19:42.240
just some large institutions, both banking credit unions that would

407
00:19:42.319 --> 00:19:45.440
tend to sort of buy buy rates in the indirect side,

408
00:19:45.480 --> 00:19:47.880
on the auto refi side. No, this is this is

409
00:19:47.920 --> 00:19:51.240
game for everyone if you have the right partner, if

410
00:19:51.240 --> 00:19:54.279
you have the right processes and systems in place to

411
00:19:54.359 --> 00:19:58.039
sort of not only find those refi opportunities but price

412
00:19:58.079 --> 00:20:01.720
them accordingly. I think this could be profitable. Whether you're

413
00:20:01.759 --> 00:20:04.400
a fifty million dollar crediting or a fifty billion dollar crediting,

414
00:20:04.480 --> 00:20:04.960
you could do it.

415
00:20:05.319 --> 00:20:05.519
Yeah.

416
00:20:05.599 --> 00:20:07.799
I think the second part of that is what I

417
00:20:07.799 --> 00:20:10.319
I'd probably lean into like if you can either find

418
00:20:10.359 --> 00:20:12.960
the right partner or build the scalability, like even for

419
00:20:13.079 --> 00:20:16.480
Refi if you you know, I think interact direct much.

420
00:20:17.599 --> 00:20:19.559
You've got to have the relationships with the dealers and

421
00:20:20.160 --> 00:20:24.200
and you know, different for a smaller organization, but even

422
00:20:24.240 --> 00:20:27.160
for a smaller organization that maybe that bread and butter

423
00:20:27.200 --> 00:20:29.480
auto Refi product where they're offering it to their members

424
00:20:29.599 --> 00:20:31.960
or marketing it to their whether it's their selecting player

425
00:20:32.000 --> 00:20:36.079
groups or their community. Being able to then actually build

426
00:20:36.160 --> 00:20:38.799
the operational efficiency, and whether you do that yourself or

427
00:20:38.799 --> 00:20:40.839
your partnering, I think that's going to be key for

428
00:20:40.880 --> 00:20:43.079
them to be successful, to make the margins work all right.

429
00:20:43.279 --> 00:20:45.880
Second one, we've talked a little bit about this with

430
00:20:46.839 --> 00:20:51.160
potential of chasing rates, not chasing rates. Rate shopping has

431
00:20:51.240 --> 00:20:53.400
made auto Refy a race to the bottom.

432
00:20:53.519 --> 00:20:54.160
I think I'd.

433
00:20:54.000 --> 00:20:59.799
Actually challenge that and say fiction, because I'm not confident

434
00:20:59.799 --> 00:21:03.920
that people consumer behavior really like, really they shop around

435
00:21:03.920 --> 00:21:06.359
that much? Are you offering them a lower You only

436
00:21:06.400 --> 00:21:08.559
need to beat the rate that they have today. You

437
00:21:08.559 --> 00:21:11.680
don't need to beat every rate in the market. And

438
00:21:11.759 --> 00:21:14.319
if you have that relationship, particularly if you have a

439
00:21:14.319 --> 00:21:18.480
relationship with the member and you're doing this campaign out

440
00:21:18.519 --> 00:21:21.240
to kind of cross sell deep in relationship through your

441
00:21:21.240 --> 00:21:24.680
existing members. Are your rates better than what they already have?

442
00:21:25.319 --> 00:21:27.920
And can use data to answer that question? Right like

443
00:21:28.119 --> 00:21:31.079
you presumably may have their DDA data you can do

444
00:21:31.359 --> 00:21:33.640
you know, soft credit polls. Can you get an idea

445
00:21:33.759 --> 00:21:35.920
of what the average rate is on your consumer base

446
00:21:35.960 --> 00:21:38.759
and then market below That doesn't have to be the

447
00:21:38.799 --> 00:21:41.200
actual bear market minimum, but it has to be below

448
00:21:41.200 --> 00:21:42.000
where they are today.

449
00:21:42.359 --> 00:21:46.640
Yeah, agreed. I also agree it's fiction. On the deposit side,

450
00:21:46.680 --> 00:21:51.720
I can go and find rates very easily through some

451
00:21:51.759 --> 00:21:54.200
simple Google searches. It's a little more opaque. On the

452
00:21:54.200 --> 00:21:57.240
autoifi side. I almost have to go institution my institution

453
00:21:57.799 --> 00:22:00.000
because of risk based pricing and because of the value

454
00:22:00.160 --> 00:22:02.279
the vehicle and the LTV and you know, there's a

455
00:22:02.279 --> 00:22:04.799
lot of different factors as opposed to here's a CD,

456
00:22:05.000 --> 00:22:08.400
here's here's the term I'm looking for. So I think

457
00:22:08.440 --> 00:22:13.240
that that that consumer that border is a less rate sensitive.

458
00:22:13.480 --> 00:22:16.799
It's more about are we are we providing that offer

459
00:22:16.880 --> 00:22:19.759
to them in the right method that they're looking for

460
00:22:19.799 --> 00:22:21.839
at the right time of what they're looking for, and

461
00:22:21.960 --> 00:22:26.319
is there enough value either in a lower rate, maybe

462
00:22:26.319 --> 00:22:30.240
a lower payment, or maybe a lower term. Maybe I

463
00:22:30.240 --> 00:22:31.680
want to pay this off a little faster.

464
00:22:32.119 --> 00:22:33.799
It's just about to ask, do you think the consumer

465
00:22:33.839 --> 00:22:36.359
even knows what their rate is? Most often probably not.

466
00:22:36.440 --> 00:22:38.279
They know what the payment is, yeah, yeah, they know

467
00:22:38.279 --> 00:22:41.119
their payment, but even yeah, even term like they like

468
00:22:41.119 --> 00:22:43.759
I said, yeah, thirty eight, thirty six, forty eight.

469
00:22:44.200 --> 00:22:45.680
Yeah, who cares at that point?

470
00:22:45.759 --> 00:22:45.920
Right?

471
00:22:46.039 --> 00:22:46.319
Yeah?

472
00:22:46.400 --> 00:22:51.680
Yeah, So on that rates, rate offers beat trust in

473
00:22:51.720 --> 00:22:53.319
attracting refi customers.

474
00:22:53.920 --> 00:22:57.799
Rate offers beat trust in attracting refi customers.

475
00:22:58.039 --> 00:23:02.039
I would say, fat, I think while you don't need

476
00:23:02.079 --> 00:23:04.680
to race to the bottom on rate because to berries

477
00:23:04.720 --> 00:23:07.839
when it's more opaque and harder to get to a

478
00:23:08.039 --> 00:23:13.119
kind of general refine market rate number. If a consumer

479
00:23:13.200 --> 00:23:15.279
believes that they can get a better loan, whether it's

480
00:23:15.319 --> 00:23:18.720
a lower rate, some sort of better terms, lower payment,

481
00:23:18.839 --> 00:23:21.039
even if that extends maybe the term of the loan,

482
00:23:21.960 --> 00:23:24.279
if they don't know your organization, well, they still may

483
00:23:24.400 --> 00:23:27.039
accept that offer if you've presented it in a way

484
00:23:27.079 --> 00:23:30.799
that's compelling and then made even that relationship with you.

485
00:23:31.039 --> 00:23:33.319
I don't think they need to start with that relationship

486
00:23:34.480 --> 00:23:36.960
to then select the auto refive product.

487
00:23:37.359 --> 00:23:40.480
Yeah, not a lot of credit unions are contacting their

488
00:23:40.599 --> 00:23:42.680
members and saying, hey, we can lower your auto rate

489
00:23:43.440 --> 00:23:46.519
auto loan rate for a loan that's already on their books.

490
00:23:46.680 --> 00:23:51.960
That tends to not happen unless there's some compelling reason

491
00:23:52.000 --> 00:23:55.559
to do it internally, whether it's from a relationship building

492
00:23:55.640 --> 00:23:58.519
perspective that hey, Drew, you're paying eight percent, Now I

493
00:23:58.559 --> 00:24:01.119
can get you down to seven, even though in some

494
00:24:01.200 --> 00:24:03.680
respects I'm sort of I'm canpibalizing a little bit of

495
00:24:03.680 --> 00:24:06.759
my own income stream. But maybe there's a reason for that.

496
00:24:06.839 --> 00:24:09.440
Maybe it's to deepen that relationship, or maybe there's a

497
00:24:09.480 --> 00:24:11.960
spiff for Drew, like hey, if you take this product

498
00:24:12.039 --> 00:24:15.319
or you know, like a second productor or some other

499
00:24:15.400 --> 00:24:17.599
ways or of building that relationship. There's got to be

500
00:24:17.720 --> 00:24:20.000
value in it for the credit union to do that.

501
00:24:21.000 --> 00:24:24.559
But the refine market, let's face it, it's basically I'm

502
00:24:24.559 --> 00:24:28.200
taking your loan and then Lynn's going to take my loan,

503
00:24:28.319 --> 00:24:30.279
you know, the next time rates. That's kind of the

504
00:24:30.319 --> 00:24:32.960
way the market works predominantly.

505
00:24:33.079 --> 00:24:36.400
My last one here is auto refi is a valume play,

506
00:24:36.640 --> 00:24:37.839
not a retention play.

507
00:24:37.920 --> 00:24:41.599
I would say that's a fact. I think that someone

508
00:24:41.599 --> 00:24:47.559
who's looking to refy their loan. It certainly isn't loyal

509
00:24:47.640 --> 00:24:52.160
to the whoever originated that loan in the first place.

510
00:24:52.319 --> 00:24:55.599
So on the buy side, as I'm trying to get

511
00:24:55.680 --> 00:24:58.960
more auto loans into my credit union, yeah, that's just

512
00:24:59.160 --> 00:25:01.640
the more volume I can get that's gonna be profitable.

513
00:25:02.279 --> 00:25:04.440
Then it really is more of a volume play.

514
00:25:05.000 --> 00:25:07.960
Yeah, I'll second Bary. Nothing to add on that one.

515
00:25:09.000 --> 00:25:11.119
Awesome. Well, thank you for tuning in to this episode

516
00:25:11.160 --> 00:25:13.000
of Leaders in Lending. We will see you next time.