Credit Union Indirect Lending

If you are interested in sub-prime automobile lending be sure to stop by Forum Solutions and pick up a copy of their “blueprint”. Thanks Doug!

If you have not taken my Indirect Lending Survey, please do so. If you have taken the survey and you would like to receive the information, please email your request to tcarnahanmmcu at msn dot com. I will be happy to share the results! Hope everyone has a great weekend!

In April of last year, my CU connected with a provider to automate our loan processing and take applications over RouteOne (and DealerTrack if they weren’t priced so high). We had good sucess, and we are enjoying the ability to accomplish more (but not having to kill ourselves to do it). The system has allowed us to take advantage of some opportunities that we were not taking before. The “little guy” that I mention in the title is your local used car lot. Many used car dealerships do not enjoy the same benefits that your new car dealerships do. They have to wait for the customer to leave get approved and come back. In February of 2007, we lauched an additional program to allow used car dealerships the same opportunity as our new dealerships. After almost six months, I can report that we are enjoying the benefits of this arrangement. We pay these dealers less than the new car dealers, but we give them quick turn around time and an additional revenue stream. Probably the best benefit (to me anyway) is the ability to negotiate an acceptable level of risk on loans without being told “Bank XYZ already approved this! If you can’t take care of one like this maybe I need to send you less!” At a small dealership you are talking to “the man.” The owner is usually concerned about the big picture as well as just the one sale. As you work with him, he sees the benefit to his business. Example? We have a dealership right beside one of our branches. Last year (Jan-Dec 06) we did 37 loans for that dealership. This year (Feb 07- today), we have done 44 loans. While this is the best increase in the number of loans out of the 5 dealerships that we have added, it demonstrates exactly how we can establish RELATIONSHIPS that are win, win. Yes there are were and will be problems, but the opportunities are too awesome to pass up. Also, if you are looking to increase your market share this is a great opportunity! Look for the opportunities, build and maintain the relationships; and enjoy the benefit! As my dad always says the reward for hard work is your paycheck…. and more hard work!

Take a moment to read Mary Arnold’s  post on employees doing what you ask them to do. A wonderful point that applies to dealerships as well! I have had CU’s ask me about starting and indirect program and if they should send their members to a dealership for financing to provide a “show of strength.” The problem with this is that you might get what you are asking for…. The dealership will expect to be paid for every car purchased there and the CU loses the valuable time that they have to share with the member while the loan is being closed. When it comes to time with your member, remember that time is a major component of building a relationship. Don’t give away that valuable asset!

Take a moment to read Doug True’s post about whitepaper and get the good news about the “blueprint” on sub-prime auto lending that will out shortly! Looking forward to reading it!!