Is there peace or war between auto dealers and credit unions -- or something in between?
From many angles it looks like peace.
Some dealers enjoy good relationships with their local credit unions. According to credit union aggregator Credit Union Direct Lending, credit unions are more likely to offer indirect loans than in the past and more likely to finance add-ons such as extended-service contracts.
Instead of earning a flat fee or nothing at all on a credit union loan, dealerships sometimes can earn dealer reserve on the customer’s interest rate and potentially earn more on aftermarket items.
Meanwhile, Experian Automotive reported this month that credit unions added share in both new- and used-vehicle loans in 2012. More dealers also have signed up for Credit Union Direct Lending’s AutoSMART online shopping site, CUDL says. Those facts suggest relationships with dealers can’t be all bad.
But sometimes it still sounds like war. Some F&I managers complain that credit unions undercut them on rates; that, after the fact, credit unions get members to cancel finance contracts with other lenders; and that credit union customers don’t finance F&I products.
What accounts for the different attitudes? Credit union membership is growing, according to Credit Union Direct Lending. That means the potential for conflict -- or cooperation -- is only going to increase.