The leading provider of auto loans in New Hampshire isn't a bank or a captive finance company.
It's a credit union.
A look at how Northeast Credit Union in Portsmouth, N.H., rose to prominence in the state illustrates how credit unions are expanding their role in auto lending nationwide while smoothing what for many years was often a fractious relationship between dealerships and those lenders.
Northeast Credit Union's success fostering dealership relationships, using face-to-face interactions and maintaining consistent lending practices gave it a market-leading 8.4 percent share of the New Hampshire auto loan market in 2013, data from Experian Automotive's AutoCount show. In 2012, it had been No. 3, with a 6 percent share.
"They're good people without being pretentious," Cheikh Dieng, business manager at Allen Mello Chrysler-Jeep-Dodge-Ram in Nashua, N.H., said of Northeast Credit Union. "They help us. We help them back."
Credit unions, once largely ignored by dealers as go-to sources of auto loans, emerged from the downturn as primary lending providers for retailers, often ahead of banks and automakers' captive finance companies.
Dealers historically had preferred banks and captives because those lenders compensated them for arranging car buyers' loans. Banks and captives also were often willing to boost loan amounts so that car buyers could finance dealers' add-on F&I products.
In contrast, credit unions traditionally made auto loans directly to members, blocking dealerships' opportunity to make money from arranging those loans.
But when the recession hit in 2008, many banks and captives sharply restricted auto lending, leaving dealerships scrambling to get customers financed.
Credit unions stepped in to fill the void. When the industry began to recover, credit unions maintained a strong hold, cementing newfound relationships with dealerships and eventually becoming indispensable.
Through April, credit unions as a group that does business with online network Credit Union Direct Lending accounted for the fourth-largest volume of indirect auto loans -- that is, loans arranged via dealerships -- behind Wells Fargo Dealer Services, Ally and Chase Auto Finance, AutoCount data show. CUDL is a brand of CU Direct Corp. There are 1,100 credit unions, including Northeast Credit Union, and 11,000 dealerships on the CUDL network.