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Credit Unions Increasingly Look to Indirect Channel for Auto Loans
0% Financing Programs Slow Rate of Credit Union New Auto Loan Growth
May 12, 2003
Indirect lending is a successful avenue for all who apply guidelines. who set up the time to look at each deal and not approve deals that are score driven. A trained eye to catch fraud. Ive seen many credit unions not succeed and have high delinquency due to dealerships finding a way to put a deal together based on score and end up in the credit union and becoming a straw purchse. Again dealerships are for profit only. and are looking for their best interest only. not the members interest.
I hope your special report details bankruptcies and charge-offs related to indirect lending programs. You never hear in the industry press what a bath some credit unions are taking on their ID lending portfolios. Plus, there are no success stories out there about gaining more than the auto loan relationship from these new "members."
Indirect lending can be successful; however, like any program appropriate due diligence prior to implementation and periodic evaluation thereafter must occur. The credit unions that "take a bath" on these programs are the ones that do not appropriately evaluate the program. They just implement the program and do no evaluation. Remember, credit unions are in existence to service their members, dealerships are in existence to make a profit, not serve your members.
Our dealer program (more direct than indirect) generates 50% of all our consumer loans and has no more bankruptcies and charge-offs than our branch loans. We also have a program to follow up on loans and cross-sell other products........works well.
Identification fraud has higher potential with indirect than with direct lending.
If the credit union controls the loan process there are no more reasons for bankruptcies and charge-offs than with direct lending. Bad decision making is the reason for credit unions to take a "bath" on their indirect lending portfolios.
Subprime Bubble? Not In Credit Union Lan...
Industry Performance (3Q 2015)
Credit Unions Increasingly Look to Indir...