EUGENE, Ore. - Oregon Community Credit Union is readying to be a part of the launch of a new initiative designed to mitigate the risk in booking auto loans with independent car dealers.
According to Tony Boutelle, Credit Union Direct Lending CEO, one of the biggest risks credit unions have in making a loan to an independent dealer is if the dealer goes out of business before the dealer gets the title to the vehicle. The Rancho Cucamonga, Calif.-based provider of indirect and point-of-sale lending services for CUs is attempting to address this weakness through its long-awaited partnership with Manheim Auto Financial Services.
The MAFS Advantage program–which Boutelle said will mitigate risk in title processing, lien perfection and vehicle loan payoff–is in final testing stages with credit unions in North Carolina. CUDL and Manheim officials said they plan to roll out the program on a regional basis soon.
Jerry Liudahl, Oregon Community CU’s vice president of lending and retail, told Credit Union Journal it is his understanding Oregon Community will be one of the first credit unions to be part of MAFS Advantage in Oregon and Washington, primarily due to its experience in indirect lending.
“One of the things that interests me about MAFS is the highest risk is doing business with independent dealers,” Liudahl said. “If an independent dealer goes out of business, it is not as well capitalized, so we might not get paid off on trades or titles. MAFS is enticing because it takes that element of risk out of the equation at no cost to the credit union.”
MAFS is part of Manheim, which is a large auto auction and remarketing firm, Liudahl continued. He said Manheim does business with auto dealers all over the country, including auto auctions where dealers buy part of their inventory.
“Manheim knows before anyone else if a dealer has financial problems. Through MAFS, Manheim serves as a guarantee agent for delivery of title, or payoff of trades. That is the attractive piece to me, because it minimizes my risk. I know if there is a problem with independent auto dealers, and the dealer is unable to deliver me title, I just have to deal with Manheim. This gives me the ability to have relationships with dealers our members are buying cars from which we are not doing indirect lending with.”
Oregon Community CU will meet with CUDL and MAFS soon, and Liudahl said the credit union hopes to start the program rolling by the end of July or early August.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
