In this second of six profiles of loan aggregators, Finance & Insurance Report takes a look at Credit Union Direct Lending. Aggregators combine technology and relationship building with lenders so that dealerships don't have to do all of the legwork to get customers financed.
Think of Credit Union Direct Lending as a matchmaking service that brings dealers together with credit unions and their car-buying members.
CUDL, of Ontario, Calif., provides a lending platform that helps dealers line up loans for customers at the point of sale. CUDL's platform links about 900 credit unions with 6,400 dealers.
"The big thing for the dealers is that we want to simplify their whole world of dealing with credit unions and make it so they have a very productive lending platform they can use," said CEO Tony Boutelle, who helped co-found CUDL in 1994.
Dealers pay a monthly subscription fee of $200 to $500, depending on the services they use. Credit unions pay only if they fund a loan through CUDL's system.
Credit unions became more important to automotive commerce during the credit crisis of 2008-09, when many banks applied the brakes to auto lending. Credit unions kept lending customers money through programs such as Invest in America, which gave credit union members who bought vehicles from General Motors and Chrysler extra rebates after loans from captive finance companies and banks dried up.
Before the crash, credit union loans in the CUDL pipeline amounted to $1.2 billion to $1.3 billion a month. That dipped to an average of about $1 billion and is running at $800 million or $900 million monthly this year.
"For most of 2009, credit unions were the go-to lender," said Boutelle, 49. "About October through September, the banks started coming back in very aggressively with no-cost-to-fund money."
He said the challenge now is the same as that in many sectors of the auto industry: "We need people to buy more cars. It's as simple as that."
CUDL also has the AutoSMART portal that helps customers find vehicles.
"We have about 600,000 cars that dealers upload to us or refresh it on a daily basis," Boutelle said. "So it's not just a lending platform; it's also an advertising and marketing platform.
"We're seeing credit unions have a very high desire to be in the auto lending marketplace. We're working on strategies to do that."
That means linking up more dealerships with more credit unions. CUDL has 10 regional offices around the country to help credit unions link up with new-car dealerships.
Keeping ahead of the pace of technology developments is also crucial.
CUDL plans to introduce a new portal at the National Automobile Dealers Association convention in San Francisco in February. The organization also has an iPhone app that includes a global positioning system that helps customers find the dealerships where the cars are available.
Boutelle said he thinks the worst may be past in the lending market.
"We're definitely seeing a slight improvement month over month," he said. "It's not going down anymore. That's a good thing."