RANCHO CUCAMONGA, Calif. – Credit union owners of CU Direct Lending are lobbying NCUA to permit the CUSO to create its own acceptance corporation, which would allow it to finance auto sales directly.
Henry Wirz, president of SAFE CU, told NCUA in a recent comment letter on the agency’s proposed CUSO rule, that CUDL should be allowed to establish an acceptance corporation that would buy large volumes of loans then sell them off to credit unions where the auto buyer was eligible to join. "Credit unions must do what it takes to keep their share of the auto lending market," said Wirz. "CUDL can help credit unions by forming an acceptance corporation."
The ability of a CUSO, like CUDL, to finance vehicle purchases, would go a long way to assuring dealers of a "reliable and consistent partnership" with credit unions, said Teresa Halleck, president of The Golden 1 CU.
As the biggest indirect lender for credit unions, CUDL, which is owned by 76 credit unions and eight other credit union entities, arranges auto loans for 660 credit unions in 48 states through 9,200 dealerships. Last year, CUDL arranged 556,000 auto sales worth $12 billion.
SAFE’s Wirz acknowledged NCUA concerns over extending such powers to credit union-owned service organizations, in light of a similar model used by failed subprime auto lender Centrix Financial. The difference with the Centrix model, he said, is that a credit union-owned and operated CUSO "has stronger controls and more transparency than non-credit union-owned third parties" like Centrix.
In the dog-eat-dog world of auto sales, CUDL said the current restrictions from financing auto sales puts it at a significant disadvantage to such competitors as DealerTrack and Route One, which are able to finance large volumes of auto transactions at a time. "Both DealerTrack and Route One are very well-finance and hard-driving competitors," said Tony Boutelle, president of CUDL, in a comment letter on the NCUA proposal. "Where CUDL is the dominant system in a particular vehicle dealership, DealerTrack and Route One anxiously await for the moment that CUDL loses favor with that dealership."
