The Need To Be More 'Thoughtful' In Lending

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ONTARIO, Calif.-Auto loan competition that continues to increase demands that credit unions be more thoughtful and strategic with their auto loan business over the remainder of 2011.

That is the recommendation of Joe Greenwald, VP of marketing for Credit Union Direct Lending (CUDL). "Competition from the banks and captives is putting pressure on credit unions to maintain market share. So now it's about being more thoughtful about how you are going to compete in this marketplace."

Credit unions can be successful, it will simply take more work, insisted Greenwald. Greater attention needs to be placed on member education on low-ball deals that typically apply to shorter terms. Greenwald emphasized that credit unions can't forget that they must remind members that often the best deal is to take the manufacturer's rebate over 0% and then take CU financing.

It also comes down to better analytics, said Greenwald, looking inside the membership to find those who need a loan and loan recaptures. Segmenting the market for opportunities today is much better than a blanket offer, Greenwald advised.

What is working, especially with the CUDL platform, is the creation of a better buying experience for the members and the sales experience for the dealer. "Have members preapproved so when they get to the dealership-and CUDL offers this-the dealer does not have to enter an app. They just enter a name and social security number and the loan is there. By making the process easier for the member and dealer you are increasing your chance that the member loan will come back to you."

That approach is helping CUDL loan volume increase 30% since early last year. "In March we hit our highest number since August 2009, and we seem to be holding at that figure, which is encouraging," said Greenwald. "Today, credit union auto loan market share is running about 15% to 16%, which is below the 22% to 23% they enjoyed in boom times just over a year ago. But share seems to be holding steady at this more traditional level."

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