3 minutes
A loan modification is a great solution for many hard-working consumers who find themselves in need of additional cash at a particular time. Unexpected life events, upcoming tuition, student loan payments or medical bills are all financial burdens that can be eased by having greater monthly cash flow.
Consumers might be reluctant at first to refinance their loans, as the time and stress typically associated with traditional loan refinancing can be significant. However, many are now finding this solution to be not only logical, but much simpler than it was in the past.
As part of this trend, some credit unions are looking at how to include the auto loan modification process in self-service environments. Doing so would better support members’ financial needs – in good times and in challenging ones – and, in turn, build the loyalty every institution seeks in today’s competitive environment.
Consumers like to be in control of their financial decision-making. In addition to control, they want convenience at every turn. But adjusting loan terms has never been considered an easy or convenient process.
What if members could go online, on their own time, and explore how their existing auto loans could be restructured?
This idea is becoming reality. For example, IMM recently introduced easyReset, which lets credit unions provide qualified members with a unique, interactive online tool to explore their options for a loan modification. Using the online tool, members can determine how adjusting their loan terms would impact their monthly payment amount.
As with most online services, members do not want to just review their options or initiate a process online; they want to complete it, from beginning to end. easyReset lets members select new loan terms, complete, sign and submit the necessary documents online, in one sitting.
A Maryland-based credit union chose to tie easyReset in with its online banking platform. When qualified borrowers log in, a banner notifies them of the opportunity to save money on their monthly auto loan payment.
Our implementation team worked with the credit union to create a unique landing page that members visit next, detailing the opportunity and directing them to easyReset to evaluate how extending their loan terms (in keeping with the CU’s policies) will change monthly payments.
This credit union decided to launch easyReset specifically for auto loans. It can also be used to let members evaluate a change in terms on their adjustable-rate mortgages. Consumers may be even more interested in this option if rates continue to rise.
A credit union’s overall performance relies on maintaining and growing its loan portfolio. Offering loan modification options is not just a competitive differentiator, but important to the bottom line. Specifically, if enough members elect to extend the terms of existing loans, a credit union can raise modified loan yield without extending additional funds.
The key to building lasting relationships with members is creating pleasant and convenient experiences. When these experiences also allow them to make life-changing financial decisions, the transaction becomes more impactful.
John Levy is executive vice president of IMM, Linden, N.J.
