As Credit Unions look for efficiencies and economies of scale within the indirect auto lending space, collaboration has become incredibly important. Many indirect lending programs available in the market today encourage competition among credit unions and participants find themselves cannibalizing each other’s members, sacrificing profitability for lower rates and focusing on less quality due to desired higher volume.
CU Alliance caught up with Credit Union Lending Alliance of New England (CULANE) CEO, Dan Daggett, who recently formed an indirect lending CUSO which credit union partners leverage their buying power and influence by working together as one voice to their dealer base. CULANE chose to partner with Credit Union Acceptance Company, LLC (CUAC) to provide their indirect technology including a Loan Origination Software platform, access to DealerTrack and RouteOne as well as other powerful business analytics to manage loan volume and other key performance indicators.
“Our previous indirect program was not conducive to success because our credit unions were competing against each other for the same dealer business and we were not on DealerTrack and RouteOne which are the platforms all franchise dealers prefer.” Daggett recalled. “By partnering with CUAC, we immediately received significantly more application volume with a better quality of paper. Working
with dealers can be tough; however, by leveraging our efforts at the dealer and working collaboratively as a group, we can focus more on profitability and loan quality without sacrificing loan volume.”
The CUAC program combined with the dealer ease of use with DealerTrack and RouteOne was an easy sell for CULANE. “Our dealers were very happy when we let them know they could submit applications to CULANE the same way they submit to all of their other lenders. This combined with a straightforward program in which the credit unions had a consistent policy and program guidelines made us that much more appealing to those dealers. We are no longer relegated at times to being the second look option. We are able to compete up front with all the dealers’ lenders including their captives, national banks etc.”
The CUAC platform allowed CULANE to maximize its automated decision strategy while providing their analysts with state of the art software to decision loans quickly and efficiently. “As we all know, speed is king in the indirect space. Decisioning loans for multiple credit unions can be tough; but, with the CUAC platform, we are able to render decisions promptly with many tasks being automated. Dealers have many options…they will not wait around for a decision when their other lenders have already provided them a way to go.”
CULANE worked for many months with the CUAC team to come up with the perfect program for them and their credit union partners. The end result was a solution that allowed the new CUSO to be more competitive in the indirect space while embracing the collaborative spirit. “We could not be happier with our success in just 6 short months. We have increased loan volume and profitability while already becoming a profitable CUSO. Our decision to utilize the CUAC platform has helped us reach our short- term goals and we feel they will be trusted partner for years to come as we expand our program offering.”
Article by Vicky Kinsey, Marketing Director – CU Alliance