VyStar Credit Union ($5.1B, Jacksonville, FL) started its indirect lending operations in 2002 and experienced moderate growth throughout the northeast Florida market. However, the credit union faced several challenges that kept it from aggressively competing with elite indirect lenders in its market.
“Most of the challenges that we initially faced when we began the indirect program (with CRIF Select) were the result of a lack of experience and inconsistent dealer communications,” says Dennis James, vice president of lending services operations for VyStar. “We recognized that there was a strong need to enhance our point-of-sale program through improved dealer communications that would enable us to address our concerns and help us to serve our dealer partners and members more effectively.”
The 37-branch VyStar serves more than 460,000 members throughout 17 counties in northeast Florida. In an already very competitive auto lending market, dealerships were resistant to offer new member relationships to VyStar through the indirect loan channel. Dealers believed that if they submitted a credit offering on a new member to VyStar that all future auto loan business for that member would go directly to VyStar and ultimately circumvent the point-of-sale process.
Through improved dealer communications the credit union now partners with approximately 110 dealerships and a list of participating dealers is accessible on the credit union website.
Due to the size of its existing market, VyStar was assigned a dealer account manager who works in collaboration with VyStar’s indirect lending staff to handle such a large territory of dealers.
But that wasn’t the only misleading perception holding back the program. Dealers thought VyStar was only interested in A+ and A-paper (known as prime credit borrowers), which clearly wasn’t the case. They also thought that working with VyStar would hold them back on future points of sale.
“It was pretty obvious to us that a change needed to be made,” James says. “So we immediately started investigating our options. We knew through leveraging the expertise on our staff and collaborating with CRIF Select that we could revise and create a successful full-spectrum indirect lending program to benefit our members and dealer partners.”
A Problem-Solving Partnership
In 2013 VyStar and CRIF Select recalibrated their joint efforts to fully maximize the experience, proficiencies, and resources of both organizations. Select Complete is a fully loaded and turnkey indirect lending solution that guides institutions from start to finish.
With its automated decision technology Select Complete can cover everything institutions need from an indirect lending program. For credit unions who are interested, Select Complete can also provide outsourced underwriting services. Although VyStar utilizes the auto decision capabilities of Select Complete, it establishes and maintains all underwriting guidelines for its indirect program. Select Complete’s outsourced services also provide support for loan package processing and funding as well as program reporting and consulting.
Dealer management services are key to the Select Complete partnership. CRIF Select provides a personal account representative in the area to interact with dealers on the institution’s behalf to help strengthen and solidify dealer relationships. Due to the size of its existing market, VyStar was assigned a dealer account manager who works in collaboration with VyStar’s indirect lending staff to handle such a large territory of dealers.
VyStar recently expanded its indirect lending platform to include motorcycles, and plans are underway for future expansions that will include RVs, boats, and other watercraft.
VyStar’s partnership with CRIF Select has been a success. Average monthly funded volumes for the first three quarters of 2014 are up to $26 million compared to $5.4 million for all of 2013. Through September 2014, VyStar has funded $242 million of in loans through its indirect program — well surpassing $65 million for 2013, nearly quadrupling its footprint.
CRIF Select’s team then completes a detailed review of the contract and communicates any necessary compliance issues back to VyStar prior to funding.
“Dealer relationships have been strengthened across the board,” James says. “They have really boosted growth for our indirect lending portfolio, and they have also boosted our membership by a 1:1 ratio.” Through September 2014, VyStar has generated more than 4,000 new members through the indirect channel, compared to 1,187 for all of 2013.
VyStar’s network of dealers has remained about the same, approximately 110 dealerships, but the biggest change is in the amount of business gained from those dealerships with the help of CRIF Select. Ed Smith, indirect lending and business development manager for VyStar, indicated that it has increased considerably. In fact, the change has been so positive that VyStar plans to expand its team of three underwriters and two staff members handling loan disbursements.
As far as the process goes, dealerships package all loan approvals and submit to CRIF Select’s processing office for funding. All stipulations are reviewed in detail as well as the execution of the retail installment contract and all other necessary supporting documents. CRIF Select’s team then completes a detailed review of the contract and communicates any necessary compliance issues back to VyStar prior to funding. As a result, Smith says, all internal and external audits, including NCUA audits, have revealed a minimum number of issues.
“CRIF Select is always open to requested procedural changes and takes a proactive approach for any enhancements,” James says. “We’ve handled numerous enhancements, and all of them were handled seamlessly without hindering the dealership or member experience.”
To ensure the partnership operates at peak efficiency as it expands, CRIF Select conducts annual reviews with VyStar. “Partnering with CRIF Select allows us to maximize economies of scale with controlled costs while being able to serve our members, develop strong dealer relationships in the communities we serve and bring credit union services to more people,” James says. “Ed [Smith] has been able to assemble a great team that has significant levels of expertise in the indirect lending arena and shares a passion for excellent member and dealer service. You couple that with an industry leader like CRIF Select that has the same level of commitment to service excellence, and our members and dealers have a great value proposition in the indirect channel.”
Even though VyStar handles its own underwriting guidelines, CRIF Select offers comprehensive underwriting services as part of its solutions. For more information on the important things to consider when optimizing the underwriting services of your indirect lending program, please click the button below to download a copy of our “Indirect Lending Top 10 Checklist: Underwriting.”
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