Indirect Lending: Lockheed Georgia CU

Learn how this credit union managed to increase its auto loan portfolio 41.5% over 2001.

 
 

CASE STUDY
Updated 5/30/02

Most credit unions have experienced the frustration of losing qualified auto loans to other lenders at the dealership. Lockheed Georgia Employees Federal Credit Union, with 88,000 members and $489 million assets, had been losing 70% of its pre-approved auto loans to other lenders. The launch of a successful indirect lending program in late 2000 quickly turned this problem around, however, and their auto loan business doubled within months.

Today, their auto loan portfolio is valued at $143 million, a 41.5% increase over 2001. Sixty-five percent of their auto loans come from non-members. Every month, new loans through indirect lending add $5.5 million to their standard monthly lobby business of $3.5 million.

According to Susan Tillery, Indirect Lending Manager at Lockheed Georgia, the credit union had struggled for years to find a program that would work, finally seeking help from the consulting firm of Koger and Williams. The consultants conducted a market survey to investigate the viability of indirect lending in the Atlanta area, concluding that Lockheed Georgia needed a much deeper understanding of the dealer's perspective in order to design a program that met the needs of both parties. "We eventually realized that we would be more successful by working with the dealers instead of against them," explained Susan.

So in addition to learning about dealers' goals and motivations with respect to auto lending, Lockheed Georgia educated themselves on auto industry jargon. The dealer training program they developed incorporated their newfound wisdom to provide required information on customer qualifications, forms, and rates in a format that dealers could easily grasp.

The program was started in October 2000 with 7 dealers and a monthly revenue goal of $600K. It was an immediate success, bringing in $1.4M the first month. "People in this area like working with credit unions," Susan Tillery says. "The program has been very successful for everyone involved - the dealers, our members and us."

The program now includes 50 dealers in the Atlanta area and contributes over 60% of Lockheed Georgia's auto lending portfolio. It has flourished by attracting highly qualified customers, achieving 80% "A" paper and a very small (.025%) delinquency rate.



 

 

 

July 22, 2002


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