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
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
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.