HOUSTON – It's not unusual for credit unions at this time of year to pay year-end special dividends to their members. Not so typical is an indirect lending CUSO disbursing rebates to its non-owner credit union clients as a show of appreciation for helping the service organization reach its lending goals for 2003. But that's just what Credit Union Acceptance Corp. (CUAC), a five-year old indirect lending, multiple-owned CUSO did for its 29 non-owner credit unions it funded indirect auto loans for in 2003. "As a CUSO, we wanted to do more than just help credit unions during these challenging lending times, we wanted to say thank you for supporting CUAC in 2003 and giving us the opportunity to serve you," said Adrian Dominguez, president/CEO of CUAC In 2002, CUAC funded 9,000 contracts with an average value of $22,000, for a total of approximately $200 million in indirect loans funded. In early 2003, the CUSO established internal loan funding goals for credit unions which, if met, would allow CUAC to rebate up to $100,000 to its non-owner clients. By the last week in December, Dominguez's end-of-year estimates put CUAC funding 16,000 contracts in 2003 worth $600 million. "We exceeded our expectations and want to give something back to our clients," said Dominquez, adding this is the first year CUAC has given rebates. The dispersed rebates are based on the number of contracts funded by CUAC for a respective credit union. The smallest rebate, for example, was disbersed to Coastal Community FCU, Galveston, Texas, which only recently signed on to CUAC. By the end of 2003, CUAC had funded six loans worth $18,000 for the credit union. Coastal Community FCU received a $68.91 rebate. In contrast, one of the largest rebates – $13,500 – was paid to Houston Postal CU, which funded 1,177 loans for the year worth about $32 million. CUAC was founded in 1998 by seven Houston-based CUs: PrimeWay FCU, Cy-Fair FCU, Energy Capital CU, Houston FCU, Houston Municipal Employees FCU, Member Source CU, and USE CU. Shell Employees CU is a current owner, but it was not a founding CU. CUAC currently services 37 CUs in the Houston, Victoria, Laredo, McAllen, Sarasota Florida and Columbia South Carolina markets. Dominguez is eager to share CUAC's secret to increasing its loan funding: While the Big Three auto manufacturers have pushed 0% incentives and rebates to lure consumers' financing, Dominguez said given the choice, "a lot of dealers don't want to do 0% financing because they don't earn the same commission as they do with other deals." He explained that on 0% financing deals, the dealers typically earn $50-$75 from the finance company. CUAC, however, pays a flat fee of $250. What's more, CUAC offers the same rate on new and used vehicles. Last October, CUAC joined the DealerTrack auto finance platform which more than 21,000 dealers and over 45 financing sources are connected to, and that also helped the CUSO boost the volume of loans it funded. Dominguez said CUAC saw a nearly 70% increase in the financing applications it received just in the first month they were out with the product. The DealerTrack platform features integration with top dealer management systems for credit application processing and report access, so less time is spent processing auto credit applications and there's a diminished potential for input errors. Business was so good last year for CUAC that the CUSO even had to expand the space it leases from Cy-Fair CU by 5,700 square feet to a total of 8,000 feet. Having worked in indirect lending since he graduated college – Dominguez worked three years at OmniAmerican FCU as a loan processor, moved up to underwriter and then credit manager; then he worked at FLS (Allied Solutions) for almost four years and started up their indirect lending program; he then left to work for one year at Community CU as consumer lending manager in charge of leasing and indirect lending, before coming to CUAC where he's been for four years – Dominguez is well aware of the importance of continuously working on dealer relations to a successful indirect lending program. "We're the central point of contact between the dealer and credit union. We have agreements with the dealers that keep them in check. It's part of life of indirect lending," he said. CUAC has relations with about 400 dealers. -

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