Credit unions aim to boost auto loans in 2015

Becker: Auto lending will be a primary channel for growth at credit unions in 2015.

Credit unions have auto loans on the front burner for next year, credit bureau TransUnion says.

“By a wide margin, credit union executives see auto lending as a continued channel for primary growth going into 2015,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit.

TransUnion conducted a survey among credit union executives last month and announced the results at a credit union conference in Las Vegas this week. Nearly half of the respondents, or 46 percent, ranked auto loans as their No. 1 growth opportunity in the next 12 months, TransUnion said.

That was more than double the next-highest consumer loan category, mortgages, at 22 percent. The survey drew 142 respondents, Becker told Automotive News during a conference call on Tuesday.

Ryerse: Sixty percent of indirect auto loan customers at Patriot Federal Credit Union are new members.

Dealer reserve

Nowadays, many credit unions make indirect loans, enabling dealerships to earn dealer reserve -- the small amount of interest lenders allow dealerships to add to the buy rate as compensation for helping to arrange loans. Historically, credit unions typically made loans directly to consumers and paid flat fees, and many still do.

One of the survey respondents -- Fred Ryerse, director of residential and commercial lending for Patriot Federal Credit Union in Chambersburg, Pa. -- said most credit unions in his area pay dealer reserve, including his. “We do both direct and indirect, but we do dealer reserve financing,” he said. “If you’re not, in my area, you’re not going to be competitive.”

Mike Long, chief credit officer for UW Credit Union in Madison, Wis., said the credit union also offers indirect loans via dealerships, but it pays flat fees exclusively and so do its competing credit unions. Nevertheless, he said, his credit union works closely with dealerships. “For us, it hasn’t been a barrier to us getting business,” he said.

Long: No barrier to more business.

Membership boost

Long said the credit union gets a lot of new members who sign up for the first time when they get their auto loan at a dealership. He estimated 40 percent of the credit union’s customers for indirect auto loans are new members. Ryerse at Patriot Federal Credit Union estimated 60 percent of his indirect auto loan customers are new members.

According to Experian Automotive, credit unions accounted for 16.7 percent of new and used auto loans combined in the second quarter of 2014 -- the latest quarter available -- up from 15.3 percent a year ago.

You can reach Jim Henry at autonews@crain.com

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