Relationships Help Credit Unions Capture Growing Auto Loan Market

Northwest credit unions continue robust auto lending in a “hot” market. Data from CUDirect and Callahan & Associates finds Washington credit unions grew the category by 56 percent since late 2011, while Oregon credit unions increased by 34 percent.

By John M. Vincent
Special to Anthem

Auto

Auto sales in the U.S. soared to new records in 2015, with initial sales reports showing that more than 17.5 million new vehicles sold. Nearly every manufacturer showed gains, with northwest favorites Subaru, Kia and Hyundai all setting annual sales records. Fueled by low gas prices, sales of high-end, high-dealer profit margin vehicles are booming.

Credit Unions are capturing an increasing share of the market by leveraging their local relationships with dealers to stay top of mind when the loans are made.

“We work with our dealers, we let them know on a continuous basis what we’re looking for, what we’re trying to avoid,” says Joseph Amrine, Senior VP and Chief Credit officer at Fibre Federal Credit Union. “They have a very good idea what our expectations are.”

Many credit union-funded loans are made through CU Direct’s CUDL program. Credit unions affiliated with the program have grown, on aggregate, to be the third largest auto lender in the U.S. More than $25 billion in auto loans were funded with the program and their 1,100 credit union members in 2015. “Over a million loans were processed through the system,” says CU Direct’s Corporate Communications lead Bill Meyer.

During the economic downturn, credit unions were better able to serve their members than other lending institutions largely due to the relationships within their communities. “They were able to help the dealerships and membership when other lenders were not able to do so,” says Meyer.

A challenge continues to be manufacturer-subsidized financing, although with the hot market there’s less of that being done. That’s led credit unions to take a close look at their portfolios to refine their place in the market, and define the terms and policies for their lending.

“We reevaluated our auto loan program back in 2013. At that time we made some changes to the terms and conditions and underwriting criteria to become a little bit more competitive in the marketplace,” says Bob Corwin, CEO of Advantis Credit Union.

With the prospect of rising interest rates on the horizon, many credit unions are looking at further refining their policies, and perhaps further extending the length of their loan terms to keep member payments affordable.

John M. Vincent is a nationally recognized automotive journalist and a credit union board member. Reach him at JMVincent2848@gmail.com or @OregonsCarGuy on Twitter.

Questions about this story? Contact Lynn Heider: 503.350.2225, lheider@nwcua.org.