NAFCU Services Blog

May 31, 2022

How AI Enables Credit Unions to Overcome Today’s Auto Lending Challenges

By Jeff Keltner, SVP, Business Development, Upstart

We recently held a webinar with NAFCU covering “Disruption and Digitization in Auto Finance.” Val Gui, Vice President, Automotive Lending at Upstart, highlighted the opportunity for credit unions to capture a portion of the auto lending market and deliver a best-in-class service for their members.

While the auto lending market represents over one trillion dollars in outstanding loan balances and auto sales have been on the rise for a decade, lenders have consistently struggled to build large, profitable portfolios of auto loans.

Offering the best digital experience possible for auto lending has been a challenge for credit unions because it requires mastering the following:

  1. Fast Funding - Today, online shoppers are used to immediate gratification and it is incredibly important to provide quick, online service along with real-time visibility into application status for members. Rather than being left in the dark on where they stand with loan approval, members expect to have their loans approved and funded within minutes, not days.
  2. The auto lending process is riddled with complexity including Know Your Customer and understanding vehicle ownership – all while maintaining compliance with individual state requirements.A Digital Experience - A fully digitized experience limiting the need for branch visits and paper forms is table stakes in today’s competitive lending environment. Credit unions should ensure they allow members to have the flexibility to start and stop an online application, while allowing their members to access the application from multiple devices is a must. Also providing a seamless mobile experience is expected in today’s e-commerce environment, and the lenders that cannot provide this experience will be left behind as technology progresses.
  3. Best-of-breed lending - The auto lending process is riddled with complexity including Know Your Customer and understanding vehicle ownership – all while maintaining compliance with individual state requirements. Perfecting these processes without a technology partner usually proves to be very time consuming, costly and can eat into returns on a historically tight-margin product offering.

Though mastering all three of these areas is a herculean task for credit unions to accomplish individually, there are lots of new tools for credit unions to help them quickly expand their auto loan portfolios profitably. Best practices allow a prospective credit union member to complete their auto loan application all the way through rate check in under five minutes. Gui said, “We’re pairing automation with auto lending – they’re two interplaying pieces that create a scenario where 1+1=3.”

Using the latest tools and processes, when a member applies for an auto loan online they can experience:

  1. Seamless application - When the borrower comes in and begins their application, the credit union can show both the borrower’s car and the outstanding loan by pulling data from various DMV and credit sources in seconds.
  2. Instant quote – By using a soft credit pull, applicants receive an instant quote that does not impact their credit score.
  3. Automated & instantaneous verification - For over 70 percent of applicants using Upstart’s platform, the borrower does not need to upload any additional information, including their driver’s license, proof of residency or even insurance information - vastly reducing friction that turns borrowers away in the traditional lending process.
  4. Quick loan closing - Borrowers can seamlessly sign all required loan documents electronically through their mobile device or tablet.
  5. Automated lien perfection - The costs and processes associated with perfecting the lien have historically been a huge pain point for credit unions when it comes to auto refinance.  In Upstart’s case, there’s a digital process that supports lien perfection across all 50 states to reduce friction for both the credit union’s internal team and the borrower. Based on the borrower's location, your CU will also know which specific processes are needed to satisfy all local lending requirements and will offer the most frictionless experience possible for each borrower.
Ultimately, by applying the right risk model to the auto refinancing process, credit unions can improve the verification process through instantaneous decisions about a borrower’s identity while reducing fraud – all while creating a digital-first, modern experience.

There are many ways to achieve some of these gains; we happen to believe partnering on the solution is usually the most effective and most efficient route. If you’d like to learn more about how Upstart is solving these problems, please visit

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