Credit unions have actively pursued more auto-loan business in recent years, and the effort is paying off.
They have expanded vehicle-financing market to 21%. That’s an increase of nearly 7% from this year’s third quarter to last year’s, according to Experian’s latest Automotive Finance Market report.
“They’ve really picked up quite a bit of share across the finance market,” says Melinda Zabritski, senior director in Experian’s automotive unit. “They’ve seen double-digit growth in the last several years.”
CU Direct, a technology provider to credit unions, believes another component is at play in this growth as well.
“Credit union members don’t shop for loans, they shop for products, and CU Direct provides the technology members use today to find the products they want as well as the lending to purchase them,” says Michael Cochrum, CU Direct’s vice president-analytics and adviser services.
Through its CUDL indirect lending network, CU Direct works with 13,000 dealers and represents 1,000 lenders.
CU Direct spokesperson Bill Meyer says credit union members can present unique challenges and opportunities to auto retailers.
That’s because the members rely heavily on the recommendations and affiliations of their local credit union when shopping for major purchases. But they are like most credit-seeking consumers today in that they want quick loan approvals.
“Credit unions using CUDL can auto-approve loans, and that’s the speed dealers and their customers look for from lenders,” Cochrum says.
Not everyone involved in auto lending is a fan of credit unions. Some dealership finance managers have accused them in the past of trying to grab customers. Some bankers question whether credit unions don’t violate their charters when they open up their memberships to virtually everyone.
Cochrum says credit unions’ increased use of lending technology provides a multitude of satisfaction. “The dealer makes the sale, the customer gets the loan they want with their local credit union and the credit union grows its portfolio.”