When Stephanie Cooper was finance manager at Timbrook Automotive's Buick-GMC and Kia dealerships in Cumberland, Md., she battled with local credit unions for years. Then three or four years ago, a credit union manager showed up and asked how he could get more of the dealerships' business.
Now that manager's credit union makes indirect loans to members who buy at Timbrook stores, finances add-ons such as extended service contracts and pays the dealership a fee for arranging the loans.
The credit union also extended its loan officers' hours to 6 p.m. during the week and added Saturday hours. After that, Cooper and her former finance director forged similar relationships with three other credit unions.
"We sat down with whoever was in charge of lending or the president of the credit union and said, 'This is our offer: We can increase your business by this amount of money, book this many more deals with you, if you guys give us the opportunity,'" says Cooper, who joined Timbrook's Chevrolet dealership in nearby Keyser, W.Va., as its finance manager in mid-October.
"We had to baby-step it and let them know, 'We're not trying to take your business away.' I'm a local person and I'm all about keeping money inside this community."
It's no secret: The relationship between dealership finance and insurance departments and credit unions can be dicey. Credit unions traditionally make auto loans directly to members, a practice that generally blocks dealerships from collecting money for arranging those loans.
And loans arranged by credit unions leave little or no room for selling and financing products such as service contracts; guaranteed asset protection, also known as GAP; and credit life insurance, which covers the balance on the auto loan if the customer dies.
Things used to be so bad that credit unions regularly warned members to stay away from the dealership F&I office because "they'll lie, cheat and steal," says Dave Robertson, executive director of the Association of Finance & Insurance Professionals.