While credit unions enjoy lower-than-average defaults on auto loans, few have escaped the upward tick nationwide in vehicle repossessions. Increased market share, driven in part by growth in indirect lending programs, have added additional pressures, making vehicle recovery and remarketing an undesired growth area for some credit unions.
Particularly those with large auto loan portfolios or those based in weak economies, like Bellco Credit Union.
“ Denver took a big hit in the weak economy because it has such a large base of technology and telecomm businesses,” explains Molly Murphy, recovery/bankruptcy specialist for the Greenwood Village, Co.-based credit union. The corresponding spike in loan defaults hasn't soured Bellco on auto lending, however.
Auto Lendng Drives Bellco's Loan Portfolio
According to Callahan & Associates' data, Bellco has grown its portfolio 25 percent over the past 18 months. The same data shows that auto loans now comprise almost 62 percent of Bellco's total loan portfolio.
“We are one of the largest auto lender's in the Denver metro area,” Murphy affirms. “We hold that position by offering low rates.”
Bellco rates as a major player on the national level as well. Ranked 31 st in Callahan & Associate's Top 50 Credit Unions by Auto Loan Penetration (as of September 30, 2004), 37 percent of Bellco's members have an auto loan with the credit union — in contrast to an average 15.73 percent across credit unions with $20+ million in assets.
As the number of vehicles repossessed and remarketed grew to its current averages of about 200 monthly (with an almost even split between those repossessed and sold at auction), Murphy says recovery and remarketing became “increasingly time-consuming and cumbersome.”
When the workload taxed its internal recovery specialists to their maximum, Bellco opted to seek a specialized technology rather than another recovery specialist.
Technology Streamlines Recovery and Remarketing Processes
Workflow had become a paper chase for Bellco's two-member vehicle recovery and remarketing team. Faxes and phone messages piled up as Bellco's recovery specialists worked with its repossession agents to track vehicles and their statuses. Worse, a misplaced file sometimes indefinitely stalls repossession.
“We sought a solution that would enable us to interface online with both our repossession agents and auctions nationwide,” says Stephani Schwettman, who heads Bellco's collections department. “We needed visibility and control of our inventory electronically, from assignment to a repossession agent through auction sale.”
Bellco quickly narrowed its options to AutoIMS.com after a demonstration using its vehicle data. A 30-day trial proved to Schwettman and Murphy that the web-based inventory management system would both automate internal processes and streamline communications with its repossession agents and auctions.
According to Murphy, AutoIMS.com greatly reduced faxes and phone calls by replacing paperwork with electronic data exchanges. Electronic condition reports, online damage estimates and approvals, integrated guidebooks for vehicle valuations, and online floor-pricing enabled its recovery specialists to work more efficiently.
“Previously, it was a very labor-intensive process to learn which cars were at auction, and then identify which ones could be sold,” Murphy offers as one example.
“We were faxing lists back and forth to find out what the auction had, let them know which could be sold, then receiving faxed CRs so we could in return set and fax back floor prices,” she adds. “Now, it's all right there online — we not only see which vehicles are at auction but also the ‘set for sale' status of each.”
Integrated vehicle hold statuses in AutoIMS also simplify meeting legal obligations such as bankruptcy holds. When Bellco flags a vehicle record in the system, the auction automatically receives notice of a hold or release.
For their part, Bellco's repossession agents have responded positively. “It makes tracking easier for them as well,” Murphy notes. “Say a vehicle assigned 30 days ago hasn't been repossessed. They're prompted to update these vehicle records and also to notify us.”
To learn more about AutoIMS.com and how other auto lenders have automated recovery and remarketing processes to save time and money, visit www.AutoIMS.com .