By John San Filippo
According to CUNA statistics, credit unions reach about one third of U.S. consumers with auto loan offers. Yet, credit unions only account for about 17% of funded auto loans. That means roughly 50% of approved credit union auto loans never get funded.

While there are many reasons approved auto loans don’t get funded (e.g., the member decides to keep their current car, the member decides to lease) the most common cause is automobile dealer “flipping.” Flipping refers to an automobile dealer that convinces your member to abandon credit union financing in favor of financing provided through the dealership.
In these situations, the credit union fails to close an approved loan. The member also loses because, again according to CUNA data, credit unions typically offer better rates and terms than other auto lenders. In other words, every flipped loan likely costs your member money they wouldn’t have spent had they used your credit union’s loan.

One company, Credit Union LIFT Fund, may have created the silver bullet to solve this problem. At the heart of the solution is the company’s LIFT Network, a proprietary closed-loop payment network that facilitates instant auto loan funding from participating credit unions to participating franchise auto dealers. The company refers to LIFT as funding as a service (FaaS). Finopotamus spoke with company founder Kirk Klinkhammer to learn more about CU LIFT Fund and the LIFT Network.
An Evolving Solution
Klinkhammer started his company five years ago by identifying the problem he wanted to solve. “I was aware from talking with credit union friends that loan flipping was a major problem, albeit one with no apparent solution,” said Klinkhammer. “I became convinced that this problem could be solved by coupling great technology with my intimate knowledge of the inner workings of franchise automobile dealerships.”
According to Klinkhammer, earlier iterations of the solution that eventually evolved into the LIFT Network didn’t include a payment component. “We considered a lot of different technologies looking for the right secret sauce that would give more power to the credit unions,” said Klinkhammer. He added that the reason flipping is so common and so easy for dealers is that once your member sets foot on the dealership lot, that dealership has a captive audience, with the credit union relegated to the sidelines. “The LIFT Network puts the credit union back at the center of the deal where they belong,” he noted.
The member-facing features of the LIFT Network are branded as FastPass. In addition to instant payments, the FastPass webapp allows members to view inventories from participating dealers, communicate with the dealership anonymously, calculate their trade-in value and seek advice from a live FastPass auto finance expert.
The Member Experience
The typical auto buying experience involves hours in the dealer’s finance office – an ordeal that is initiated when the member completes a credit application. However, as Klinkhammer pointed out, when a member is paying via their smartphone with FastPass digital currency from a loan that’s already been approved, there is no need for the member to complete a credit application.
“Once the dealer gets that credit application, they have you,” explained Klinkhammer. “Their attention shifts from selling you a car to selling you a loan that provides maximum returns for the dealership, including maximum backend dollars and rate increase revenues. But when a member pays using FastPass, it’s like walking into the dealership with a suitcase full of cash. We all know that if you walk into a dealership as a cash buyer, you’re in and out faster than most. The same is true for FastPass-initiated LIFT Network funding.”
The Dealer Experience
Since dealers flip loans because they make money on those flipped loans, Klinkhammer knew he had to offer dealers a compelling value proposition to get their buy-in.
“On average, a franchise dealer spends about $650 in marketing and promotions for every car they sell. A good chunk of that comes from buying leads from sites like Autotrader,” said Klinkhammer. “When a credit union signs up for the LIFT Network, they agree to direct members to participating LIFT Network auto dealers. In other words, the dealer gets free referrals of buyers who have already been approved for financing. That’s a very big deal.”
Instant payment through the LIFT Network addresses another issue that all dealerships face: cash flow. “Even on flipped loans, the dealer may wait a week or two, or even longer, to actually receive those loan proceeds,” said Klinkhammer, “but when we say instant funding, we mean instant funding.” He explained that when a loan is funded, the funds are immediately transferred to the dealer’s LIFT Network wallet. Through the dealer’s LIFT Network administrative console, the dealer can then initiate a transfer of the funds to their bank account.
The Credit Union Experience
The primary benefit of the LIFT Network to credit unions is that by reducing dealer loan flipping, they’ll close more of their approved auto loans directly. However, said Klinkhammer, there’s more to it.
“Credit unions will often end up funding flipped loans,” explained Klinkhammer. “That happens when the dealership directs the flipped loan to be funded by the originating credit union by sending the loan through an indirect lending platform. They do this because it’s easier for the dealer. In other words, I as the credit union still get the loan; it just costs me more to get it.” Participating LIFT Network dealerships agree not to flip any credit union loans – including flipping to the original credit union via indirect lending. What’s more, the LIFT Network streamlines the funding process by, for example, eliminating the need to generate and deliver paper checks.
“In the end, it’s all really about creating a better member experience,” said Klinkhammer. “It’s all about people helping people.”
He noted that the LIFT system is in testing with a $1.3 billion credit union in Southern California and is on track for a second quarter 2024 launch