LAS VEGAS - Credit unions entering into or considering indirect lending relationships with independent auto dealers were cautioned to be aware of the risk of the dealer going out of business before receiving title to the vehicle. It’s a lesson Credit Union Direct Lending has learned as it’s spent much of the past year hammering out a parntership with Manheim Auto Financial Services, which has been piloting just such a program in North Carolina.
“Some of these are small shops that do 25 to 50 cars a month,” said CUDL CEO Tony Boutelle. “The lots do not have a lot of wherewithal.”
There is high risk in title processing, lien perfection and vehicle loan payoff, he said, adding, “Manheim guarantees these three processes. Manheim has 11,000 independent dealers that are part of the MAFS Advantage program.”
Approximately 25% of all auto transactions are done at independent dealers, Boutelle said. “The MAFS Advantage program opens up this channel. Many credit unions have pulled out of independent dealers due to the risks involved. This program won’t eliminate risks, but it will help mitigate the risks that have pushed credit unions out. Instead of these small dealers having to have title departments, MAFS does it for them. MAFS becomes an extension of the dealership. It also pays off the trade-ins.”
The MAFS Advantage program “flows through” CUDL’s system, he said. CUDL’s database identifies MAFS dealers, and information flows between CUDL and Manheim. “It makes it easier for the credit union and the dealer to conduct business,” he said.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
