Indirect lending: Growing trend benefits members, credit unions and auto dealerships in New England

MARLBOROUGH, Mass.- Everything happens in its own time, or so the saying goes. In the Fall of 2000, Digital FCU, the largest credit union in New England and the “fastest growing credit union in America from 1996 to 2001,” according to a Callahan & Associates survey, attempted CU Direct Lending’s (CUDL) indirect lending program. But only a few New England dealers in the Marlborough area of 32,000 were signed on and the credit union didn’t have an “indirect” process fully in place. Consequently, after five months they discontinued the program. The time just wasn’t right. In July 2002, however, CUDL, established only eight years before, had over 80 dealerships signed on in New England and 1,200 nationally, and had partnered with 26 New England credit union participants. Digital FCU decided to try the program again, and took some proactive steps. They hired additional staff and a business development person to oversee the Indirect Lending program. CUDL set up its Workflow Manager software for the CU to conveniently process and track the loan applications, basically easing the process for the CU to administer. In the CU’s first four weeks with the indirect lending program, they reaped 74 loans worth $1.2 million. How does Workflow Manager enable growth in CU car loans? Convenience, speed and ease of funding, primarily. “The dealer receives a loan answer within 30 seconds,” responded Diane Richard, Digital FCU’s vice president of consumer loans. “It has a Fax-back communication piece for us to respond to the dealer immediately on `referred’ applications, and we can process the dealer `funding’ directly through the Workflow Manager.” The department staff appreciates the easy funding, with “no waiting on faxes and no paper shuffling,” according to Richard. In turn, members receive faster, more convenient access to auto financing. With 173,872 members worldwide and $1.61 billion in assets, they require a computer software lending program with features above and beyond the usual – with convenient, easy-on-staff processing. “Our members are able to get their financing from DFCU directly at the Point-of-Purchase,” said Richard. “The streamline application process gives the dealer an answer within 30 seconds of submission. And a number of them can drive off the lot the same day with DFCU financing, even on a Sunday.” The participating dealers benefit too. Richard explains: “Through Workflow Manager, we are able to provide the best service to the dealer. The Fax-back feature allows us to send specific notes and requirements on referred applications within minutes of receiving them because everything is available on the desktop. And, the easy `Funding’ feature allows us to send funds to the dealer within 24 hours of receiving the loan packet.” “In every market we enter,” said Tony Boutelle, president/CEO of CUDL, “we hire staff to support both the credit unions and dealerships. We currently have 95 employees with the majority of our staff divided into regional business units to provide this support. Our business units support the credit unions and dealers equally and focus on building relationships between the parties.” Ongoing training and support to CUs is critical to the success of the program, according to Boutelle. Along with two annual Auto Lending Symposiums, CUDL has 37 different regional training opportunities planned for this year, and which are free for participating credit union staff. “Our training sessions focus on reviewing strategies for using the CUDL system, new enhancements, marketing and building relationships with dealers,” confirmed Boutelle. As for the CUDL Workflow Manager, it’s specifically for credit union users of the CUDL program, streamlining the application process and tying in new features to the Web-based CUDL automated decision-making system. Credit unions use the program for greater efficiency, with additional reporting and tracking capabilities. Consequently, said Boutelle, the CU gets the ultimate goal – more loans. “In some of our markets,” said Boutelle, “we’ve helped credit unions capture 25-30% share of the auto lending market.” Conversely, Boutelle related that, according to J.D. Power & Associates, “credit unions are capturing approximately 16% of the U.S. auto market financing.” With an advanced indirect lending program, Richard believes it can only enhance the CU’s current programs and services. Richard attributed their claim-to-fame for phenomenal growth to four key reasons: a good working relationship between the board of directors and management; an excellent Success Sharing Program, where every employee can earn up to 10% of their annual salary by achieving DFCU’s business growth objectives in four to six key areas; a focus on continuous improvement; and employee satisfaction. -