ATLANTA–Many credit union members need financing for medium-ticket expenditures, and Kyle Kehoe believes CUs can help these consumers, book a loan and generate fee income, all at the same time.
Kehoe, VP of sales for CRIF Lending Solutions, said typical examples of vendors in need of merchant lending include orthodontists, plastic surgeons, sellers of recreational vehicles from motorhomes to ATVs, swimming pool installers or other home improvement providers, and furniture stores.
"We have a product that works with members who need financing at a merchant," he said. "The credit union can buy our technology and we automate the relationship."
In the example of an orthodontist–whose work typically is not covered by insurance–the dentist would have a portal where he/she enters a loan application on behalf of the member. The application flows to the credit union, and if the CU approves it, the documents return to the dentist's office for signature.
"The merchant pays the credit union a fee, as it benefits the merchant to have a financing option for its consumers and sell more of its products," said Kehoe. "The credit union receives a new loan, plus it gets fee income from the merchant for providing financing for the merchant's customers. Several of our credit unions do really well with this. It is almost the opposite of indirect lending in the fact the merchant pays the credit union, rather than the credit union paying a dealer."
Staying on the subject of indirect lending, Kehoe said CUs have an opportunity to charge certain dealers fees for doing business with the credit union, including application fees.
"This would not be a large revenue stream, but with significant volume it would add up" he said.
