WALL, N.J.-First Financial FCU here has launched Jersey First Auto Connection, a turn-key CUSO designed to help credit unions across the state expand their indirect auto lending portfolios.
Alice Stevens, COO at First Financial, said that the CUSO was the product of a 2010 conversation with CEO Issa Stephan "about using some of the experience that we've developed in the indirect area over the years and helping out some of the credit unions in the New Jersey area. There's a lot to know, there's some overhead involved, and some expertise that has to be present to get into that book of business, and we felt like we had some capacity to do that-and, of course, it creates some non-interest income for the credit union as well, so it's a win-win for everybody."
Stevens has spent more than two decades in the credit union community, working at three different CUs where she was involved with indirect auto lending. FFFCU is also working with an independent contractor to help the CUSO and participating credit unions build a network of partner dealerships throughout the state.
Jersey First utilizes the Credit Union Direct Lending (CUDL) platform for a decision engine, and Stevens explained that the function has been structured to set up each client credit union as an individual entity, allowing CUs to customize their own underwriting guidelines "rather than having to use a standard, one-size-fits-all type of underwriting." Stevens explained that CUDL's platform offers the ability to set up the CUSO as a kind of parent and then create individual decision engines and pricing models for each participating credit union.
Credit unions (and dealerships) that want to take part must sign an agreement with CUDL and "what we're really looking for," said Stevens, "is a commitment on the credit union's part to make sure that they have the resources available to approve the loans when we make the initial recommendation, because turnaround times for the dealership is critical." She said that the CUSO targets a 15-minute turnaround time on decisions.
Although Stevens was hesitant to share specific costs, she said that participating institutions will pay an annual fee as well as a $195 per-funded loan fee. Sign-up costs will vary based on a credit union's membership size. Such fees are currently the only revenue generators for the CUSO, though Stevens said that over time it may expand CUSO services into other areas, such as portfolio and risk-management consulting.
For now, the CUSO is largely being marketed to credit unions via the New Jersey Credit Union League, including ad space in the league's daily and weekly e-newsletters. Additionally, through First Financial's participation with the league, Stevens said that the association is able to help match up credit unions that might be a good fit for the CUSO; those CUs are receiving direct mail about participating. Stevens added that as long as a credit union is chartered to serve New Jersey, it should be able to participate.
"Really it's more a matter of the credit union having the interest to develop this potential market rather than any other requirements," said Stevens.
