Where Has One CU Found Vehicle Loan Opportunities?
While layoffs and gas prices continue to hound the automotive world, one credit union has found a way to boost at least one part of its loan portfolio with recreational vehicles.
But in this case, member interest is primarily not in the Winnebagos and other self-propelled homes away from homes.
State Employees CU has expanded what had been a fairly "restrictive" program to help more members who dream of roaming the open road in an RV. And despite the high gas prices that have led some people to downsize their SUVs in favor of more economical cars, interest in RVs is on the rise, according to Phil Greer, VP-loan administration for SECU.
"A few years ago, requests for [towable, pop-up and other non-motorized RVs] were nonexistent," Greer told The Credit Union Journal. "But we've started hearing interest from members."
To respond to that member interest, SECU decided to expand its old RV loan program, which only offered loans on motorized RVs and with the same rates and terms as their auto loans.
Now, the credit union will finance new and used motor homes and towable recreational vehicles including travel trailers, 5th wheels and pop-up/fold-down trailers. Terms are available up to ten years for new motor homes and travel trailers/5th wheels and up to six years for pop-up/fold-down trailers. Terms for used RVs vary depending on the age and type of RV, and the rate is currently at 7.75% when the loan is repaid by payroll deduction.
"This allows a lot more flexibility for the member. The previous policies and procedures were a bit restrictive," he said. "There was simply some degree of reluctance regarding the quality of the collateral (related to non-motorized RVs), and we had to overcome that concern."
The expanded program has been in place for only a few months, and SECU has already seen it generate "several hundred thousand dollars" in loan volume so far. "That's a welcome increase in volume, and it's volume we wouldn't otherwise have had," Greer related. "But what we like best about the program is that it gives us more opportunity to serve our members."
Still, SECU isn't expecting to be overwhelmed with RV loans. "I'm not convinced we want to be the premier RV lender given the environment we're in right now," Greer said, referring to the high price of gas and rising interest rates. "But for the right member, we want to be able to help them. I'm not convinced that the average member has a need for an RV, particularly given the gas prices today. It's a bit more of a luxury purchase today than it was even just two years ago."