Credit Unions Can Prove Strong Auto Lending Partners in Tough Economic Times
LAS VEGAS — According to Tony Boutelle, president and chief executive officer of CUDL, credit unions are a great avenue to turn to for indirect auto loans, especially with some national and non-prime lenders retrenching.
"Credit unions are in a great position to make auto loans in this marketplace. Basically, less auto loans are being done and this is a great opportunity for credit unions to gain auto share," Boutelle explained to SubPrime Auto Finance News.
In fact, he indicated that with the exception of perhaps Toyota, credit unions have a lower cost of funds so they don't have a lot of the same challenges with portfolios as the banks and finance companies who went deeper. Additionally, credit unions tend to have a full-spectrum of risk, so not all their loans are subprime.
Continuing on, Boutelle estimated that about 90-percent of new-car financing is originated at the point-of-sale, with about 70 to 80 percent of used-car financing as well. This equals a strong opportunity for dealers to take advantage of partnering with credit unions to fund their customers.
"Some credit unions became disillusioned by the indirect lending business, but they are continuing to improve in that area," he explained.
"The thing we focus on most is dealer relationships, our origination system and the underwriting system. CUDL strives to help credit unions make loans. We do a pretty good job of helping them fund loans quickly and getting through the booking of it all and dealers need to realize this," Boutelle said.
One big challenge credit unions have shown is that indirect lending is a different product than making direct loans to members. "We help them in that area," he noted.
Moreover, another obstacle for credit unions is the remarketing side of business.
"They are really struggling with remarketing. Many are smaller credit unions and they don't have the ability to work with Manheim to own their own lane. We're working to aggregate all of our credit union-partners units together. We're continuing to build that strategic alliance out. We've done a lot of training on this, but there is still a lot of training to do," Boutelle pointed out.
In fact, helping credit unions better be prepared to work in the indirect auto loan arena was a big topic for the recent 10th Annual Auto Lending Symposium. The conference served as the backdrop for a host of presentations and panels on a plethora of issues, such as profitability in indirect lending, marketing, technology, F&I, remarketing, collections and much more.
"Credit union attendees befitted from this year's timely focus on succeeding in a competitive marketplace. The interaction with automotive experts in particular provided our credit unions with important insight to the keys for successfully advancing their partnerships with dealers," Joe Greenwald, CUDL's vice president of marketing and communications, told SubPrime Auto Finance News.
"Combined with networking events that allowed for the sharing of ideas, conference attendees indicated the event was successful in providing tools to build and enhance relationships with dealers, with the goal of helping both grow their bottom lines," he added.
As for Boutelle, he said simply, "we hit a home run."
At the event, CUDL announced the winners of its 2008 Best Practices Awards and Diamond Awards in front of more than 400 symposium attendees.
A highlight each year at the symposium, the event's Awards Dinner recognizes 12 credit unions for their exemplary auto lending practices and success. During the dinner 10 credit unions were awarded by CUDL for their best practices in 2007, in five categories: Business Development and Dealer Relations; Portfolio Growth & Risk Management; Marketing to Members' Remarketing and Collections; and Marketing AutoSMART to Members.
Additionally, two credit unions were also awarded the CUDL Diamond Award for their continued excellence and success in the auto lending marketplace.
In the category of Business Development and Dealer Relations, Visalia, California-based Tucoemas Federal Credit Union and Tacoma, Washington's Sound Credit Union, were presented with the CUDL Best Practice Award. Raleigh, North Carolina's Coastal Federal Credit Union, along with Beaverton, Oregon's First Technology Credit Union, were honored for their efforts in the category of Portfolio Growth and Risk Management.
For their success in the category of Marketing to Members, Richmond, Virginia's Call Federal Credit Union and Plainville, Connecticut-based UBI Federal Credit Union took home the Best Practice Award. Santa Rosa, California's Community First Credit Union and Redwood Credit Union were recognized for their best practices in the category of Remarketing and Collections.
Introduced at the 2007 event, the Best Practices Awards for Marketing AutoSMART to Members was presented to Pennsylvania's Erie Federal Credit Union and to University of Wisconsin Credit Union.
Rounding out the evening's awards, CUDL recognized San Antonio-based Security Service Federal Credit Union and Marlborough, Massachusetts's Digital Credit Union with CUDL Diamond Awards for their continued success in advancing their auto lending programs and championing the importance of a credit union-owned delivery channel.
"We greatly appreciate the hard work and dedication our credit union partners put into their auto lending programs, and recognizing their success is our way of saying thank you," said Boutelle. "Their success provides all of our credit unions with best practices that will contribute to the overall value and success of the entire network."
During the event, CUDL also announced the new CUDL/Prime Alliance Lending Symposium. Basically, officials are merging the industry's two most recognized lending symposiums, the Auto Lending Symposium and the Prime Alliance Symposium, which is the leading mortgage lending event for credit unions.
Premiering in 2009 and a first in the industry, the CUDL/Prime Alliance Lending Symposium is essentially designed to be the credit union industry's largest, most comprehensive lending conference, covering all aspects of the lending marketplace.
The two CUSOs have combined their respective symposiums to create the industry's leading conference source, dedicated to advancing credit unions' success across all lending channels.
The new symposium will provide credit unions with a single event that provides vital insight to all aspects of lending, addressing the major issues and trends affecting the industry as a whole. The event will have an extensive line-up of educational sessions dedicated to each lending channel, providing attendees with the latest industry thinking and perspectives on the auto and mortgage lending marketplaces.
Executives with CUDL and Prime Alliance confirmed that the inaugural event will take place May 13-15, 2009, at the Bellagio Hotel and Casino Resort in Las Vegas.
"We are very excited to be jointly hosting a strategic lending Symposium with CUDL next year," stated Keith Nolan, Prime Alliance's executive vice president of sales and marketing.
"While credit unions are currently benefiting from the consumer's ‘flight to safety,' we look forward to creating a forum where credit unions can network, learn and interact with the brightest lending minds in the industry to determine how best to keep these existing market share gains permanent," he continued.
The Prime Alliance Symposium consistently attracts more than 225 attendees, representing 75 of the industry's leading mortgage lending credit unions.
"We are very excited to be teaming with Prime Alliance, bringing together each company's marketplace leadership to provide credit unions with an event that will address all aspects of lending," said CUDL's Greenwald.
"The event offers an ideal forum for credit union mindshare, as it brings together the expertise and straightforward dialogue that will help CUs to build, manage and grow their loan portfolios and overall lending success," he concluded.