Are Your Members Shopping for Lower Rates Right Now?
By Catherine York Powers, CEO, Constant
January 13, 2025
Auto loan growth has slowed to its lowest point in over a decade, and with interest rates declining, a new challenge is on the horizon: members chasing lower rates elsewhere. Even the perception of a rate reduction – whether or not it significantly lowers a payment – is enough to trigger shopping behavior. For credit unions, the cost of doing nothing is clear – member loss, portfolio runoff, and declining trust.
But here’s the flip side: this is also an opportunity to make leaving harder by excelling where it matters most. The question is, would your members abandon you for a marginally cheaper offer? The answer depends on how well you shine in areas that genuinely impact their lives.
Shifting Focus: Loyalty Through Member-Centric Innovation
Recent trends show a rise in prime and super-prime borrowers opting for used vehicles, signaling that affordability and value are top of mind. In this environment, outdated, manual processes for servicing loans become glaring pain points. Members are frustrated by the time it takes to request payoff quotes, get a payment skip or adjust payment schedules – and they’re more likely to jump ship for financial institutions offering seamless digital experiences.
Credit unions must ask themselves: are we making it easy for members to stay, or are we creating reasons for them to leave? By addressing these frustrations head-on with intuitive, self-service options, credit unions can transform member retention from a reactive process into a proactive advantage.
The Rate Drop Reality: Retention Over Refinancing
As rates are declining, refinancing offers from competitors are already arriving in your members' inboxes. For many, the lure of a slightly lower payment will be strong – unless you’ve built a relationship that’s stronger. That relationship hinges on more than rates; it’s about satisfaction, trust, and the perception that their credit union genuinely understands and prioritizes their needs.
Credit unions that offer personalized, automated solutions – like payment adjustments or retention-focused loan modifications or even telling members how to manage being upside down in a loan – can keep members engaged and loyal. By reducing friction and offering real value, you make it easier for members to see you as a partner they can’t afford to leave.
Future-Proofing Through Action
The slowdown in auto loan growth and the anticipated rate drop aren’t just challenges – they’re a wake-up call. Credit unions that invest now in member-focused innovation won’t just survive; they’ll thrive. By leveraging technology to streamline experiences and deepen relationships, you can make your credit union the kind of institution members wouldn’t dream of leaving.
Would you abandon your favorite brand for a marginally cheaper competitor? Most wouldn’t – and neither will your members, if you give them compelling reasons to stay. The time to act is now not when runoff or member flight is underway.
Connect with Constant to learn more.
About Constant
Constant's executives, experienced in managing billions in retail debt, grew frustrated with legacy core system constraints and manual operations. They boldly transitioned loan servicing from manual to digital self-service, reshaping the operations landscape. Constant’s mission is to empower members to self-serve online and help credit unions grow through meaningful interactions with their members.