The recreational vehicle market continues to be one of the hottest indirect lending trends in our industry. Chicago-based Alliant Credit Union is one of the top 10 largest U.S. credit unions. With $8.6 billion in assets, Alliant operates with an indirect lending portfolio of $380 million that includes a portfolio of $227 million for indirect RV lending. Given the strength of its current operations that utilizes an outsourced provider for its loan origination system, dealer management services, and processing and funding support, the RV portfolio currently grows at an average of $20 million each month.
Here, Jeremy Pinard, vice president of consumer lending at Alliant, shares insight on what makes his credit union’s indirect RV lending program so successful.
Can you give us a glimpse at your current rate sheet and terms?
Jeremy Pinard: As it currently stands, our rate sheet has 52 different rates that are contingent on credit score, loan-to-value ratio and the term. For example, our lowest rate of 3.24% percent would be offered for an applicant with a score of at least 780, an LTV of 90% or less, and a term of 96 months or less. We are able to approve lower credit scores, but do limited volume in the lower tiers.
Do you use the same LOS for all of your consumer loans or a separate one for your indirect RV portfolio?
JP: The LOS we use for our indirect RV lending is separate from our platform used for our direct lending. The indirect loan software is supplied by our outsourced provider. I realize this could be matter of preference that will vary from one credit union to another based on their operations and goals, but we find it very valuable to separate the two channels – direct vs. indirect.
With using an outsourced provider, how involved are your own staff members with the success of your indirect RV operations?
JP: Our outsourced provider does a lot to help our program especially from a processing and funding standpoint. That being said, a key aspect to our program is the involvement of our two RV account executives who split the country. Currently, our program has 196 dealers, and we manage those dealerships to a 20% look-to-book (LTB) ratio. When we started asking for that LTB minimum in early 2015, our average LTB was 9%. However, we closed last year with an LTB of 23%.
In order for us to achieve our desired LTB ratio, the RV account executives are responsible for building strong relationships with our dealers and maintaining strong lines of communication. The RV account executives are responsible for contacting their respective dealers at least once each month – sometimes more often if the dealership is one of our top 10 dealers.
One of the things about indirect RV lending is that there are more touch points than commonly associated with traditional indirect auto lending programs. This is because most of the units we see are on average around $60,000, with some as high as $150,000 to $200,000. Due to the disparate sizes of these loans, I would advise other RV lenders to have their own dealer relationship manager.
You mentioned increasing LTB to a floor of 20%. Have you had to deactivate any dealers?
JP: We had to deactivate 26 dealers, but there were no surprises since we maintained strong lines of communication with each dealer. Those dealers clearly knew our expectations and where they stood.
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