4 minutes
Efficient online service and flexible financing are key to winning this generation’s business.
Sponsored by SWBC
With 80 million millennials in adulthood, the baby boomer generation has been replaced as the largest generation alive. As baby boomers continue to enter retirement, millennials are laying the path for how industries will evolve to suit their needs.
Millennials grew up with and are accustomed to the digital and online conveniences that have been created to accommodate their busy lifestyles. From ordering groceries to obtaining an education, people have quickly adapted to the ease of completing tasks online.
This preference also holds true when it comes to financing their vehicles.
Due to financial burdens like student loan debt, millennials are wary of making large purchases that require them to take on additional debt. Aside from the purchase of a home (which they are doing later in life) or juggling that student loan debt, the purchase of a vehicle will be one of the first significant financial commitments they make.
With endless access to information and online deals, lenders can be assured that millennials will spend time browsing and researching multiple loan options before making a final decision on who they will choose to be their lender—because in this day and age of endless information, borrowers are in a position to equip themselves with more knowledge and resources to get the best deal they can.
Improve Your Online Presence
In order to adjust to borrower needs, credit unions are taking a more transparent approach by providing borrowers with immediate information upfront. This includes creating an online presence that is attractive and informative to potential borrowers. Since borrowers are now turning to the internet to assist them in the decision-making process of major purchase decisions such as auto loans, it's imperative your credit union is making that information available to them digitally. Many lenders have implemented user-friendly online solutions that improve the experience of the borrower through the research, application, approval and repayment stages of lending—tools that millennials are looking for.
Re-evaluate Your Application Process
As credit unions continue to improve their customer-facing solutions, their internal solutions must also improve to keep pace with borrower needs. For example, when it comes to the actual application process, millennials prefer applying online. Not only are they able to conveniently apply to more than one lender, giving themselves options, but they also favor the paperless process. Many lending institutions still require hefty paperwork processes, but the expectations of the new generation of car buyers will pave the way to more streamlined and efficient practices.
Flexible Financing
A major factor in working with millennial car buyers is understanding their financial situation. They typically carry higher debt and may have lower incomes than previous generations had at the same age, and they may be delaying car purchases until their late twenties. As previously noted, many millennial borrowers are making an additional monthly payment due to student loan debt—an additional strain on budgets. Therefore, flexible financing options can give millennial car buyers loan options that better fit their financial situations.
Despite the financial differences from their boomer parents, millennials are still purchasing vehicles at a 21 percent higher rate than baby boomers did at the same age. A growing trend in the industry is extending auto loans to nearly 72-80 months, quite a jump from the once average 48-60 month loan term. While the decision of getting an auto loan for 72-80 months isn’t always ideal, this option can result in more realistic payments for millennial borrowers.
Auto loans are still very much in demand. With millennials providing a large pool of potential business, credit unions can make small adjustments in their business models to accommodate their needs and find themselves landing on the “short list” of lender options for this savvy generation of car buyers.
As millennials continue to dominate the industry as the largest purchasing group, auto lenders have a huge opportunity to tweak their services to appeal to millennials and win their business and trust. To learn more about auto lending trends and ways to improve your lending, download our free ebook, 2018 State of Auto Lending.
Headquartered in San Antonio, SWBC is a diversified financial services company that provides a wide range of insurance, mortgage, and investment services to financial institutions, businesses, and individuals. With offices across the country, SWBC is committed to providing quality products, outstanding service, and customized solutions in all 50 states.
