Indirect Lending In The Internet Age

Online loan submission is proving to be one of the most productive and cost-effective loan generation tools in the lending toolbox. Discover how one Utah credit union is having tremendous success generating quality loan volume.


While many credit unions are operating indirect lending programs, one Utah CU is carving a unique niche. Online loan submission is proving to be one of the most productive and cost-effective loan generation tools in the lending toolbox. Here's how one CU is having tremendous success generating quality loan volume…

What's the Story?
In the first quarter of 2002, AFCU (Ogden, UT) initiated its indirect lending program to increase its auto portfolio as well as provide the convenience of point of sale financing to its membership. Using DecisionApp indirect lending software as the medium to originate, underwrite, fund and track their indirect lending portfolio.

Here are the program setup requirements and numbers from Randy Halley & Scott Budge, the CU's VPs of Special Projects:

  • Online loan submission by the dealer network is essential for our workflow process. The dealers are compensated according to industry standard flat fees, therefore the three to four minutes to submit the online application is not an outrageous requirement.
  • Instant online approval is critical to our indirect lending program. The CU wants to immediately capture the high quality loans that are submitted anytime, including after hours such as weeknights and weekends.
  • Online dealer communication is necessary to accelerate the indirect lending flow process. For example, time spent tracking down missing loan stipulations is minimized since online dealers are alerted instantly in their loan queue, of any items that are delaying funding on each indirect deal.
  • In the past three months, AFCU has received over 4,200 loan applications.

What do dealers think about online loan submission?

The dealership point of view regarding indirect lending has not changed. A dealership needs a lender to be responsive, consistent, competitive and excel in the two critical areas of loan decision turn around time and funding time.

Mary Woodward, Finance Director for Mark Miller Subaru (SLC, UT) explains it this way,
"With a few clicks of the mouse, Decision App enables me to see my loan history with the credit union. I enjoy being able to submit and receive online decisions anytime of day; this is essential since most lenders do not work dealership hours. Decision App works for me because I can see the loan status of my credit union deals. I know if a deal is being held up in funding, when a deal funds and my compensation all from looking in my online loan queue."

Decision App Characteristics

Decision App allows the Dealer to input credit applications into an online platform. The Dealer has the ability to order and view credit reports, calculate financial ratios and choose which participating Lender(s) the electronic application will be submitted to. Once submitted, the dealer can also track the status of the application online, all the way through funding.

The electronic application's first stop after being submitted by the Dealer is Decision App's Automated Loan Decision. In this system each Lender can build a "Risk Based" evaluation model that pre-defines different grades, or levels, that an application may fit into based, on the applicant's credit profile. Within each grade, or risk level, the Lender can choose 26 different parameters for the system to test and the Lender can change parameters and rates at any time. If the applicant's profile passes all the tests, then the Dealer is notified within seconds that this application is automatically approved along with the rate and terms of approval.

If the applicant's profile fails one of the tests, then the Dealer is immediately notified that this application is being referred to a Loan Officer for further review and that they can expect a decision within the hour. The electronic application is then dropped into the Lender's online platform for the loan officer to review and make a decision.

The loan officer can review the Application, Credit Report and Ratio analysis, as well as communicate their decision back to the dealer. They can also generate adverse action letters for declined applications and cross-sell letters for approved applications. Decision App even calculates dealer incentives, funding amounts due each dealer and tests for Reg. Z rate tolerance.

Decision App also provides a suite of over 30 reports that allow the Lender the ability to track activity and profitability for a single dealer or for the whole portfolio. Month end, management and board reports are a mouse click away.

Test Drive our Decision App Indirect Lending Approach Today

Indirect Services, Inc., located in Salt Lake City, Utah, has served indirect lenders since 1996 and has software accounts nationwide. For more information visit email or call toll free 1-877-485-7752.



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July 29, 2002



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