BALTIMORE—One credit union that outsourced its indirect auto lending business says it views dealerships as branches of the credit union.
That has led the $1.3-billion MECU Credit Union to add almost 1,300 members via the indirect channel this year through the first three quarters.
MECU also says that keeping pace with all of that activity is best done through a third party.
“We work with 200 dealerships that we have and I like to view them as 200 branches of the credit union,” said Thelma Matthews, AVP of lending production at MECU, during a recent Origence webinar on outsourced loan processing.
“Our dealerships are in Maryland, Virginia, Delaware…and we're moving into Pennsylvania eventually,” said Mathews. “Through the month of September we had added this year about 1,275 new members through the indirect program. That's something we would not have had without this indirect program. We simply could not have been in all of these areas. Indirect has expanded our reach and let us get into other markets.”
Increase in Funding
Outsourcing its indirect auto lending program to CU Direct Connect has led to more than a 14% increase in funding in recent years, said Matthews, who outlined advantages of third-party assistance.
One of the biggest benefits from the move, according to Matthews, is staff don’t have to work late into the evenings and on holidays to meet the demands of dealers that are doing the same.
“We had our staff coming in on holidays and weekends to work just to keep up with the volume, because one thing about dealers, if you're not here when they need you, you're not going to get the business. So, you have to be available to answer all those calls,” explained Matthews.
Reduced Staffing
Matthews said moving to CU Direct Connect has reduced its staffing costs.
“It has reduced our overall staffing costs by not needing to have full-time people available almost around the clock,” said Matthews. “You don’t need a full-time equivalent to address every single need you have with indirect lending. We have improved our efficiencies.”
There are also issues of personal safety to consider when employees work late into the evening, Matthews added.
“We work in downtown Baltimore. So, sometimes we had to have people here till 7:00 at night,” she said. “That means it's dark outside and people have to walk to their car. This move has addressed that whole issue of personal safety.”
Increased Speed
Matthews added outsourcing has increased the speed for dealer payouts.
“The dealers are getting paid faster because we are not sending checks via FedEx, and that means they like us better,” Matthews said.
Separately, during the webcast, Lee Eastwood, VP of CU Direct Connect, told attendees that leasing interest is growing among credit unions.
“Leasing is seeing a lot more attention from credit unions, and I believe this has to do a lot with falling loan-to-share ratios,” said Eastwood. “Most credit unions are flush with cash and they are turning to leasing…Thirty-three percent of U.S. automobiles that are being sold are leases.”