HAUPPAUGE, N.Y.—GrooveCar’s CU Xpress Lease program is celebrating its 10-year anniversary. The company noted that the program continues to grow at a fast pace—with business in July up 40% over year-to-date 2015, and CU Xpress Lease is on pace to fund close to $1 billion by the close of the year.
First introduced by GrooveCar in 2006, the program provides a seamless process to capture auto loan volume through leasing, GrooveCar said.
“Credit unions remark how it fits the needs of members, especially Millennials, looking to get into a vehicle that may have been out of reach through a conventional loan structure,” said Frank Rinaudo, senior vice president, in a statement. “In some regions of the U.S., leasing accounts for up to 70% of new vehicle purchases. This allows credit unions to be competitive 100% of the time, at the point-of-sale. The program provides all the tools needed to compete against captives and banks.”
Rinaudo added that CU Xpress Lease has provided a way for credit unions to enter the “highly profitable and exclusive lease market. Members want value for their hard-earned money, leasing will get them into a vehicle they might not otherwise be able to afford through traditional financing. The average car payment on a leased vehicle is $412, compared to $479 with a traditional loan. Offering a lease option meets with members’ needs and financial preferences.”
The program manages the disposition of vehicles at lease maturity, is 100% responsible for vehicles’ residual value and any wear-and-tear, along with an average FICO score of 757, a 75% “look-to-book” and an average term of 37 months.
“Credit union partners remark that members benefit as well through flexible lease payments, terms and mileage allowances along with access to lease specials on high quality vehicles,” said Rinaudo. “We are thrilled to reach this milestone. However, we are always looking towards the future, planning for continued growth we can bring to our partners. This is accomplished through analyzing trends affecting lease market penetration, consumer spending patterns and future demand.”
Rinaudo pointed out that CU Xpress Lease assumes 100% of the residual risk. When vehicles come off lease, over-mileage charges are covered as are off-lease damage fees, and termination fees.
“Nothing is deducted from the amount the credit union is paid. In addition, credit unions on the program benefit from having a dealer base developed in each lease market served by a CU Xpress Lease regional manager,” said Rinaudo. “Program managers service all aspects of the program for the credit union. This includes bringing dealers onto the program, training, maintaining relationships and other support services for the credit union.
“The CU Xpress Lease program has grown to become the nation’s number one credit union automotive lease program featuring a portfolio of over $3.2 billion and more than 65,000 vehicles,” continued Rinaudo. “The program provides credit unions with the ability to tap into incremental growth with a suite of services.”
According to Francis Collins, senior vice president of credit at Teachers FCU here, “Our partnership with CU Xpress Lease has enabled Teachers to grow not only its indirect channel but also its loan portfolio in a significant way. Lease volumes have increased over 200% in the last six years with the program. CU Xpress Lease is one of the main drivers of net loan growth at Teachers.”
The demand for leasing has skyrocketed, outpacing traditional loan structures in many areas of the U.S., GrooveCar said.