LAS VEGAS -- A number of factors powered credit unions on the CU Direct network to become, in the aggregate, the largest provider of auto loans in the U.S. last year. They include loyal members, ties with more than 14,000 dealerships and competitive rates.
Now CU Direct says another strength will keep its members' auto-loan portfolios growing: speed of credit decisions.
"Currently, the top 10 percent of our credit union partners are achieving 50 percent or better automated approval of dealer loan applications," said Roger Hull, chief product officer for lending solutions at CU Direct. On average, though, credit unions are getting automated approvals in the mid-20 percent range. "We're in the process of applying advanced analytics, machine learning and [artificial intelligence] to drive the average automated approval percentage to 50 percent or better."
Doing that, he told Automotive News during the 2018 NADA Show here, "could double the loans funded by credit unions within the automotive space." After all, getting an approval back to a dealership faster than other lenders increases the odds that the credit union wins the business.
And doubling loans is something credit unions know about. Automotive loans funded by credit unions on the CU Direct network have doubled since 2013, according to CU Direct.
In 2017, auto-loan originations by credit unions on the CU Direct network rose 16 percent from a year earlier to 1.8 million loans, according to data from CU Direct and Experian Automotive's AutoCount. Those credit unions as a group, therefore, were the largest supplier of auto loans in the U.S., up from No. 2 in 2016. The figures are for loans only, excluding lease deals.
Of the loans originated by those credit unions, about 30 percent were direct loans to credit-union members, while roughly 70 percent were indirect loans that resulted from dealerships' F&I managers arranging loans for their customers through a credit union.