A group of credit unions in Oregon is seeing greater returns after turning to the Internet to move reposessed vehicles.
Case in point is Northwest Community Credit Union, which was getting minimal return from its inventory of repossessed vehicles. It is relying upon a technology company that helps CUs auction repossessed cars on the Internet.
Vern Nichols, indirect lending manager for Northwest Community CU, said the relationship with Portland, Ore.- based TitleAuctions has made a significant difference in the 60,000-member, $395-million CU's bottom line just in its 90-day trial period.
"The program keeps getting bigger and better for us each time we do it," he said. "We have sold 11 cars through online auctions, and it is bringing a lot better return than dealer auctions. We start the minimum bid around wholesale. Some cars get just one bid, but that price still is better than a dealer auction."
Northwest Community isn't alone. Other credit unions in Oregon are also participating, and for good reason. Nichols estimated that NCCU is making about $2,000 to $3,000 more per vehicle than it had prior to using TitleAuctions. He said NCCU has 11 branches that serve people who live or work in 12 counties in the most populated part of Oregon - the "I-5 Corridor" from Portland at the northern end of the state to Medford in the south along Interstate 5.
"The key is getting the word out and making people aware this option exists. Our staff has done a good job of doing so," he said.
Both members and non-members can purchase a repossessed vehicle from NCCU. But, if the buyer is eligible to join the credit union, he or she is given the opportunity to do so. Nichols said Northwest Community has done the financing for six of the 11 auction purchases so far, which has brought in more revenue.
Necessity the Mother of Invention
Mark Coleman, president and CEO of TitleAuctions, said his company was founded because the mother of his business partner, software engineer Michael Taylor, was the manager of a credit union that found itself with several repossessed cars.
"Dal-Gold Federal Credit Union is in a northern Oregon town called The Dalles," Coleman explained. "The town is out in the middle of nowhere, and the credit union was having trouble selling the cars, so Taylor's mom called him to ask if there was something that could be done on the Internet."
Coleman said he and Taylor visited the Credit Union Association of Oregon with only a basic idea of forming a partnership with a few CUs to auction repossessed cars online. However, he said, CUAO exceeded their expectations by providing contacts, setting up a pilot program and investing seed money in the company.
About The Company
TitleAuctions was founded in October 2002, and launched its service in March of this year. In just a few months, the company has expanded its network of client CUs to eight. In addition to Northwest Community CU, TitleAuctions serves four CUs in Oregon: Oregon Pioneer CU in Milwaukie, Safeway Northwest CU in Clackamas, Southern Oregon FCU in Grant's Pass, and Portland Postal Employees CU in Portland.
Clients in other states are Elkhorn CU in Ft. Harrison, Mont., and Columbia Community CU and Clark County Schools Employees CU, both based in Vancouver, Wash.
Coleman said TitleAuctions expects approximately 20 credit unions to sign contracts in the next 60 days, and the company is expanding into the Southwest.
Each credit union can customize its own TitleAuctions Web page. Nichols said Northwest Community's TitleAuctions page is on the CU's website, and shows only the cars offered for auction by NCCU. If someone visits the TitleAuctions site directly, he or she would be able to browse all vehicles available at all client CUs.
Help For Smaller CUs
"This service gives smaller credit unions that might not have the staffing to handle repos the ability to do so," said Nichols. "It puts everyone on an even playing field, and the cost is minimal compared to the cost of running a newspaper advertisement, using consignment, or operating a lot."
NCCU pays $50 to post a vehicle for auction, and an additional $150 if the vehicle is sold.
Nichols said the credit union repossessed 267 vehicles in the past 12 months. The goal, he added, was to sell those vehicles in less than 90 days after availability-which generally is 15 days after the repossession.