The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding the indirect lending content herein. The opinions expressed in this article are the opinions of the individual authors and may not reflect the opinions of MeridianLink, Inc.
Originally published on CUInsight.com
3 Key Takeaways
- Speed: Credit unions that deliver quick, consistent decisions and transparent communication earn dealer trust and win more deals.
- Loyalty: Indirect lending borrowers rarely convert to full members unless credit unions actively engage them through personalized onboarding and cross-sell strategies.
- Technology: Integrated lending, marketing, and data intelligence tools can streamline dealer workflows, improve member engagement, and help credit unions adapt quickly to changing market conditions.
Auto lending is entering a new chapter, and credit unions are feeling the shift. According to the NCUA’s Q2 2025 Quarterly Data Summary, credit union auto loan balances fell by $6.5 billion year-over-year. New auto loans dropped by 3.7%, while used auto loans saw a smaller dip of 0.1%. At the same time, the cost of buying a car has reached record highs, with reports showing that the average new-car payment hit $749 per month in Q1 2025.
Taken together, these numbers tell a clear story: auto lending is slowing, competition is fierce, consumers are more cautious, and credit unions have an opportunity to stand out.
The Strategic Fork in the Road
Credit unions now face a choice. Some may consider pulling back from indirect lending, protecting margin by tightening participation, and letting competitors take the volume. Others will lean in and invest in dealer relationships while prioritizing speed, transparency, and fair underwriting—not just rate.
This is not just about offering the lowest rate. Credit unions that position themselves as trusted, fast, reliable, policy-driven partners are better able to hold dealer relationships and capture first look on financing.
The winners in the next chapter of indirect auto lending will not necessarily be the ones with the cheapest rates, but those that can:
- Make quick, consistent decisions
- Deliver funding with minimal friction
- Build trust with dealers by honoring service-level agreements (SLAs)
- Activate borrowers into engaged members once the deal closes
The Loyalty Gap
The challenge is clear: indirect lending is an incredible acquisition engine, but it does not automatically translate into long-term member value.
Data shows that fewer than 1% of indirect borrowers convert into fully engaged members. In fact, a typical credit union sees its share of wallet with these borrowers drop by about three percentage points post-funding.
In other words, credit unions are bringing in volume but often missing the opportunity to build a relationship. Why does this happen?
Indirect lending can feel transactional. Members often view the credit union simply as the financing source, not as their primary financial partner. Onboarding is slow or nonexistent. Many credit unions don’t have a structured process to welcome new borrowers, explain the value of membership, or cross-sell relevant products. Communication stops after funding. Without consistent engagement, the member’s next loan or account often goes elsewhere.
This is the “loyalty gap.” Closing it requires a strategy that balances dealer speed on the front end with member engagement on the back end.
A Practical Playbook for Credit Unions
There is no one-size-fits-all solution, but there are common building blocks credit unions can adapt to their own strategy. Think of this as a playbook rather than a checklist:
- Measure What Matters
You cannot improve what you don’t measure. Start by tracking:
- Decision time: How long from dealer submission to approval?
- Stipulation delays: Where are conditions slowing funding?
- Funding cycle time: How quickly do you get money to the dealer?
- Day-90 activation: Are new borrowers opening additional accounts or engaging with other credit union services within 90 days?
With this data, you can pinpoint bottlenecks and set benchmarks for improvement.
- Decide With Confidence
Speed is critical for dealers, but consistency is just as important. Build “safe zones” in your underwriting policies that allow for auto-decisioning on routine deals, and streamline your exception process so credit analysts are focused only on the edge cases that truly require human review.
It’s equally important to hold dealers accountable. Lenders should define and enforce SLAs for document quality, stip delivery, and communication. The goal is to create a partnership where both sides are working toward faster, cleaner funding.
- Engage Beyond the Loan
The first 90 days are critical for turning a transactional borrower into a relationship member. Develop an onboarding program that includes:
- A welcome email series that introduces your credit union and its benefits
- Invitations to open a checking or savings account
- Pre-qualified offers for credit cards, personal loans, or refi options
- Educational content on managing auto loans, budgeting, and credit health
This engagement should be personalized and data-driven and include relevant offers based on the member’s profile and financial behavior.
How Indirect Lending Technology Can Help
Technology is the backbone of a modern indirect lending strategy. When used effectively, it can turn what was once a transactional process into a powerful growth engine—one that strengthens dealer partnerships, deepens member relationships, and drives long-term success.
Faster Dealer Decisions With Seamless Lending Workflows
With MeridianLink® indirect lending solutions, credit unions can make policy-driven lending decisions instantly. Need to apply an exception? Real-time status updates keep dealers in the loop, building trust and making your credit union the “first-look” lender they turn to when they need fast, reliable funding.
Deeper Member Engagement Through Marketing Automation
MeridianLink® Engage helps credit unions stay connected long after the initial loan. It automates onboarding and cross-sell campaigns, making it easy to reach members with personalized offers—like refinancing or additional products—right when they’re most relevant.
Smarter Portfolio Visibility With Data Intelligence
With MeridianLink® Insight, credit unions get a clear, real-time view of how their lending programs are performing. Dashboards show everything from approval cycle times to post-funding engagement, helping teams spot trends early and respond quickly to changing market conditions. It’s data you can act on, not just look at.
When these solutions are used together, you’re not just managing loans—you’re building lasting growth powered by connection, insight, and trust.
Your Next Steps
There’s no single path to indirect lending success, but there is a powerful balance to strike. While credit union auto lending has softened industry-wide, MeridianLink customer data shows auto loan volumes up more than 10% year over year in 2025. The message is clear: with the right digital infrastructure and member-first approach, meaningful growth isn’t just possible—it’s already happening
The credit unions leading the next chapter of auto lending are those that combine dealer speed with member loyalty, turning every funded deal into the start of a lasting relationship.
The credit unions best positioned to achieve that will:
- Act fast and stay consistent to earn dealer trust and capture more opportunities.
- Deliver a seamless, transparent experience from application to funding.
- Engage borrowers early and often with personalized onboarding and relevant product offers.
- Leverage data intelligence to fine-tune performance, accelerate approvals, and strengthen relationships over time.
