AUSTIN, Texas-As CUs place a greater emphasis on used car lending, they need to do an even better job of managing risk.
That goes beyond underwriting guidelines, reminds Teres Solutions, to evaluating the stability of independent dealers. CEO Tim Kelly believes credit unions can strengthen their used car business by increasing their relationships with reputable independent car dealers.
"I know there is a stigma associated with these guys, but if the credit union develops a process that qualifies dealers' financial stability, evaluates their reputation, and perfects the lien, I think they can get more used car volume," said CEO Tim Kelly.
A process for perfecting the lien is critical. As previously reported in Credit Union Journal, Philadelphia-based VINtek noted that more dealers are taking a vehicle in trade, not paying off an existing lien, and putting the car on the lot.
"Some CUs are working with state and local independent dealer associations to identify reputable and financially stable independent dealers," Kelly pointed out. He added that credit unions should also pay for an independent car condition report.
