BURLINGTON, Mass.-A new website could help credit unions boost auto loan portfolios and cross sell additional services.
MoneyAisle.com, which has allowed banks to compete for consumers' savings business, has been expanded to include new and used auto loans and refinancing. While MoneyAisle's CD engine is driven by banks, the lending component is supported primarily by credit unions.
So far 85 CUs have signed up and 110 are in the pipeline, according to Mukesh Chatter, CEO of neoSaej. Fewer than 10 banks are currently participating.
"As we prepared to introduce the loan product it was clear that credit unions are the entity more focused on consumer loans," Chatter said. "It just made so much sense and a natural choice to make credit unions members of this network."
CUs of any size can participate, and currently those in MoneyAisle range from $50 million to $1.5 billion. Financials do not pay to become part of the site, but are charged a fee each time a loan is fulfilled. While Chatter termed the price financials pay for completed loans "significantly" less than costs to acquire loans through newspaper or online advertising, he declined to disclose the actual fee.
Chatter contended that MoneyAisle is a great way for CUs to offset some of the indirect business they are losing to the banks. "And you are making the loans direct, rather than indirect, which gives you the chance to cross sell."
MoneyAisle's auto lending component invites consumers to key in their ZIP code, loan amount, details on the car being refinanced or purchased, and credit score. They hit "run auction," and in less than one minute through an automated process are returned a list of financials that offer the lowest rates and monthly payment. Institutions are ranked in order of monthly payment, with rate and term displayed.
The cross-sell opportunity comes when the consumer chooses a financial and clicks on "apply now." The CU is alerted of the request and contacts the consumer within one hour. "Some credit unions want to go straight to the loan app, but most want that opportunity to talk to the customer and cross sell products like gap, or offer a 50-basis-point reduction to take a mortgage or other products," Chatter said.
Community Charters Only
Credit unions must be community chartered to participate, and on the back end they work with MoneyAisle to load the zip codes they are eligible to serve. "They also work with us to set risk monitoring and risk control," emphasized Chatter.
CUs tell MoneyAisle the percentages of loans they want each month in the various credit categories. "If the credit union says its wants 30% in near prime and the rest super prime, if three loans are closed in the near-prime category, that means seven more must come from the super prime bucket. The system will not allow the credit union to fall outside its risk parameters."
Chatter also said MoneyAisle allows CUs to set thresholds for loan-to-value, car mileage, and even car make. "They can tell the engine that they want 30% to come from GM, for example."
All deals are subject to verification, and if consumers have not been truthful or accurate in sharing their credit score, the offer is either withdrawn or the rate changes. During the site's beta test, Chatter said that 10% to 15% of consumers are typically "off" about their credit score and that 25% to 30% of inquiries had been converting to a closed loan.
MoneyAisle's CD site had been averaging 50,000 to 100,000 visitors per month, and Chatter expected the number for the loan auction to be higher. "Since it is lending and everyone from 18 to 80 are involved-unlike deposits that are restricted to much a smaller percentage of the populous-we expect a lot bigger coverage." A national advertising campaign is supporting the launch.
Currently no mega-banks are participating in the loan component, according to Chatter, who said neoSaej is talking with one. But Chatter feels the loan auction concept may not marry as well with bank low-rate offers due to restrictions many of the bank offers carry. He feels many are limited to only A-plus paper and are primarily for new cars. While MoneyAisle does not monitor rates offered by financials within its system, in seeing lists of loans that have been closed during the beta test, Chatter said credit unions have come in as low as 2.89%.
MoneyAisle plans to expand later this year to offer personal loans and other lending products, Chatter said.
