Credit Unions with Indirect Lending Programs Outperform Those Without

Over half of all credit unions with over $50 million in assets participate in an indirect auto lending program. Find out how their growth compares to their peers who don’t offer indirect loans to their members.


Credit Unions increased their auto loan balances by 6.0 percent in the 2 nd quarter, reaching $166.7 billion. The 1,688 credit unions that participate in indirect auto lending programs increased their balances by 10.6 percent and hold about 69.5 percent of all credit union auto loan balances.

For credit unions over $50 million in assets, those with an indirect lending program grew their auto loan balances 4.8 percentage points higher than those without an indirect loan program. They also outperformed credit unions without an indirect lending program in total loan growth and member growth.

Auto Lending Model Growth Comparison
12-Month Growth for U.S. CUs with over $50 Million in Assets
Data as of June 30, 2005

1,167 CU's with an Indirect Lending Program
836 CUs without an Indirect Lending Program

Total Auto Loan Growth

New Auto Loan Growth
Used Auto Loan Growth
Total Loan Growth
Member Growth


For those that offer indirect loans, they have the option of either running the program in-house or partnering with a third-party vendor. $38.6 billion of all indirect loans outstanding were made between dealers and credit unions directly while $20.3 billion were made between a dealer and a third party vendor that partnered with the credit union.




Sept. 5, 2005


  • We have experienced a phenomenal 205% growth in our Indirect program this year. We are writing 90% A and A+ loans, very low delinquency rate. You must have good relationships with the right dealers. I was in the auto business for 23 years and am now the proud manager of an outstanding Indirect program. Thom Rawls, The Tennessee CU, Nashville, TN.
  • Article was interesting, but not surprising. Although indirect lending increases member and loan growth knowing what the price in delinquency, losses, ROa gives a more complete picture.
  • We are in the 7th month of indirect lending and results have been good. However, for the complete performance picture of such programs, an analyis of the overall net loan yield, loan losses, credit spread & profitability is required of this type of loan growth before it can be said to be really "outperforming" other types of lending.
  • We are still in the program; however we have had very high delinquencies. We did not do something right!
  • excellant article, your Member appreciates this service-convenience. You are buying dealer papers and not making loans, the botton line, do you know how to purchase dealer paper, if not than please consider outsourcing.