By Marci Bacarisse, Project Manager – Credit Union Acceptance Company, LLC
When credit unions think of indirect lending, the first thing that comes to mind is risk. Risk is inherent with any type of lending; however, with indirect auto lending, risk can be exacerbated by elements created by the dealer and the inability for the credit union to personally interact with the member.
As the premier provider of indirect lending services for credit unions and CUSOs across the country, CUAC takes a very proactive approach to quality control and compliance. With the Full-Service platform we have now provided for over 20 years, our credit union clients place a large amount of trust in us to underwrite auto loans on their behalf – this is something we do not take lightly. Our dedication to purchase quality indirect paper for our valued clients is a two-pronged approach. The first is providing superior underwriting on the front end. The second is an in-depth audit process each month.
Underwriting Indirect Auto Lending
The foundation of any lending team is experience. Between management and non-management credit team members, CUAC boasts an average tenure of over 9 years. In addition to the experience, the CUAC underwriting staff members benefit from a very diverse background which includes working for captive finance companies, national and regional banks as well as other credit unions. Another key component to quality underwriting is a sound set of policies, procedures and guidelines. As a credit union owned CUSO, CUAC’s loan policy has been honed since our inception in 1998 by our owner credit union clients and our executive management team who has been in the indirect lending industry for decades. CUAC employs a conservative loan policy, in-depth systemic analysis, an empirically derived score card developed specifically for indirect auto lending and risk-based pricing which includes real-time attributes including projected losses. As part of our extensive due diligence to our credit union clients, CUAC procures all loan loss data and incorporates it into our risk model and pricing components.
The Indirect Lending Audit Process
In addition to the strenuous underwriting performed on the front-end, CUAC provides a comprehensive audit process each month. The audit is comprised of a broad sampling of all transactions, including the underwriting & funding process and ensures that each employee has an equal number of records reviewed. The audit will confirm that all policies and procedures were adhered to and that all loan documentation was processed accordingly. Employees are required to maintain a high degree of accuracy and any deviation will result in progressive disciplinary action. Audit results and additional feedback are provided to our management team which is used to determine the training needs of the staff. Audit results are also a key component of our rewards and recognition program. Employees are incented financially for their accuracy and performance results on the audit. The CUAC staff takes a great deal of pride in quality control and there is a healthy competition among team members to be the best.
At CUAC, the organization understands the trust placed in us by our valued credit union clients. We recognize that the key to our continued success is to provide performing and profitable loans that adhere to the highest degree of quality. Although technology may change and the auto buying process continues to evolve, our dedication to quality credit union indirect auto lending will remain steadfast.