Aimbridge's New Subprime Auto Lending Division Lets CUs, Dealers Serve Credit Challenged Members

DENVER – By entering the subprime auto lending market, Aimbridge Lending wants credit unions to be able to offer auto loans to those members who fall outside the prime lending market. Aimbridge Lending COO Ann Schmitt said she didn’t have estimates on the number of auto loan applications that are refused by credit unions because of members’ credit ratings. But she said about 40% of the applications the company receives aren’t able to be processed through a credit union lender “for a variety of reasons.” “Prime lending precludes part of the markets credit unions serve,” say Schmitt. “Offering subprime auto loans gives credit unions the ability to capture an important segment in the credit union family.” Aimbridge has formed a new division to offer the subprime loans – Member Lending Acceptance Corp. (MLAC). Prime auto loans are typically made through Aimbridge Indirect Lending. Aimbridge has relationships with 115 credit unions in nine markets throughout the U.S. Of those nine markets, the company has the largest number of CU relations in Ohio through its partnership with the Ohio Credit Union League. In Florida, Aimbridge has relations with 15 CUs in the Tampa market. Schmitt said the company selected that as its test market for MLAC because it had specific data on the type of borrowers that were in the market and was able to determine where MLAC fit in. In setting up the new division and the beta testing, Aimbridge took a sample of 26 of the 300 dealerships it works with in the Tampa market to educate them on the company’s subprime auto lending program. Schmitt said the dealers provided input on features of the program. She stressed that whenever a dealer takes a loan application from a member, the credit union will always be given the first opportunity to book the loan. An application never goes directly to MLAC. Since the loan stays on Aimbridge’s proprietary technology platform, the member’s application can be easily directed to MLAC if the credit union determines not to take the loan. At press time, the beta testing was continuing, and Schmitt said Aimbridge Lending was gradually adding dealerships to MLAC. She expects to finalize the testing within the next 30-45 days and hopes to begin rolling MLAC out to credit unions outside the Tampa market by the end of the first quarter or the beginning of the second quarter. “Every market is unique to some degree, but by and large what we learn in Tampa we’ll be able to move the core to other markets and only have to make minor adjustments,” says Schmitt. -