''Repossessions are a money loser,'' many credit unions say. Most credit unions have little positive to say about repossessed autos. The economy has taken its toll in the past few years, increasing bankruptcies and subsequently increasing a credit union's occasional need for repossessions, leaving credit unions with autos they do not want. That story is heard all over the industry, except at a few credit unions that run eBay-style progressive auctions off their websites.
Ent Federal Credit Union been auctioning repossessed vehicles to members since 2001. On their website, a member can see pictures of cars, trucks, and RVs up for auction, with details such as retail value, mileage, and VIN number. The page refreshes every 30 seconds with a current bid history, high bid, and time remaining in the auction. Auctions are entirely automated; member bids, which may only be submitted online, are instantly updated on the site, and at the end of the auction, an email notification automatically goes to the high bidder and to the credit union.
The next step in the process occurs over the next three days, when the high bidder can test drive the car and decide whether or not to purchase it. Although Ent has the vehicle inspected by a licensed mechanic and ensures it passes emissions, the high bidder may also have the car checked by an independent mechanic. Ent also offers Mechanical Breakdown Protection on select vehicles that members can purchase. The coverage extends beyond the manufacturer's warranty should mechanical problems occur.
''It's a win-win situation for the member and the credit union,'' said Davis Johnston, director of collections & loss prevention at Ent. Ent sells repossessed vehicles for higher than if it sent them to wholesale auctions. Additionally, about 48% of repossessed vehicles sold through the website result in new auto loans. Ent has sold 86 vehicles via online auction in 2003 YTD, resulting in 42 new loans totaling $446,027 with an average yield of 6.15%. Members appreciate the online auctions because they can purchase vehicles at reasonable prices. In fact, the auction section of the site is consistently in the top five for the most hits on the site.
''What began as an initiative to increase the usefulness of our website has proved to be a value for members and the credit union,'' said James Moore, Senior Vice President of Corporate Development. ''We continue to look for ways to increase the value of the auction and the usefulness of the site as a whole.''
To learn more from Ent Federal Credit Union and other leading credit unions about innovative auto lending website solutions, join us for Callahan & Associates' webinar, Proven Strategies to Capture Auto Loans Through Your CU Website. Feel free to contact Jill Richardson at Jrichardson@creditunions.com or 1 800 446 7453x144 if you have any questions.