By John Flynn, Open Lending President & CEO
As the world begins to rebuild following the far-reaching impact of the coronavirus, consumers are seeking guidance regarding their financial status.
Statistically, we’ve seen a drastic uptick in unemployment claims (38.6 M people have filed for unemployment since the pandemic began, according to CNN), but new claims have begun to decline. Additionally, interest rates have been falling and are near all-time lows, so what’s the best way to help your members and grow your business?
Now is the time to work with consumers on refinancing their current loans. By helping borrowers refocus and lower their monthly financial outlay, they have the opportunity to improve their financial health, and so does your credit union.
Auto loans have been credit unions’ bread and butter for decades, and no one does them better. Auto loan interest rates over the last several years have averaged 4% to 5%, according to ValuePenguin. Taking the time to work with your members and leveraging their payment history, refinance rates can be nearly half that rate, depending on your credit union’s underwriting criteria, saving your members money now to help them recover.
Mortgage rates have been falling to near record lows as well. Helping homeowners refinance their mortgages made over prior years can help families for years to come. The Washington Post reported interest rates are down nearly 1% from a year ago, at near-record lows. A single percentage point can save members hundreds per month and thousands over the life of the loan.
Refinancing members out of high-interest credit cards is another option. This is an area in which credit union can really shine. Help borrowers consolidate their debts with new credit cards at consumer-friendly rates or offer home equity lines of credit to help ease their financial burden and stress. These products help consumers take advantage of the current low-interest rate environment, while adding members and revenue to your credit union.
Credit unions must not pull back the way other lenders do during times of crisis; these are the times we’re meant to function best. Understanding your specific members’ challenges will help your credit union tailor offers to help improve their overall position financial situation and position your credit union to succeed. Times of crisis are excellent opportunity for credit unions to build trust and awareness with consumers and strengthen your position as a pillar of the community. Not-for-profit credit unions have the luxury of building the 100-year company. Start today.