By Jennifer Mason
Interest rates are on the rise, a phenomenon that hasn’t been seen in years. While credit union executives are looking forward to an increase in lending rates and investment income, they must not forget the other income-generators they have relied upon over the last decade.
Keeping a healthy and diversified portfolio of non-interest income products is key to keeping their income statement balanced. Per Experian’s 2016 “State of the Automotive Finance Market” report, credit unions became the second-largest lender type. That same report also noted increases in both amount financed and loan terms, with the average loan length growing to 67 months.
Higher interest rates, longer loan terms and larger amounts financed can leave credit unions exposed to inordinate risk. Members could have less disposable income to take care of their unplanned expenses; which in turn could lead to higher delinquency rates for credit unions. A recent AAA survey, stated that 64-million American drivers already would not be able to pay for an unexpected vehicle repair without going into debt. And this with the average repair bill being between $500 and $600. Your members need Mechanical Protection to help them defray these costs and worries.
Mechanical Protection helps your members with expenses when their vehicles break down. In addition to covering parts and labor, Mechanical Protection plans can help with the following costs:
Mechanical Protection is an important product to help protect your member’s disposable income, but it is also equally important to your credit union. Including Mechanical Protection as part of your loan portfolio of products, you can increase non-interest income revenue while decreasing delinquencies.
According to Steven Szkaly, an NADA economist, 2017 will see 17.4 million auto units sold indicating another strong automotive sales year. As current market conditions indicate higher interest rates, strong automotive sales, rising credit union financing, increasing delinquencies and, increasing repair cost having the right Mechanical Protection partner is imperative to credit union strategic planning. Mercury Mechanical Protection has been providing mechanical protection to credit unions and their members since 1974 and has a 97% satisfaction rating. Mercury has several products designed specifically for credit unions and their needs.
Jennifer Mason is Director of Sales, Mercury Mechanical Protection. She can be reached at 419-860-4731. She can be reached at jmason@mercuryinsurance.com