While the past year has been great for credit union auto lending business, it can't always be just about the party.
Both Lee Domingue, CEO of indirect lending at Wolters Kluwer Financial Services and Larry Highbloom, president of VINtek said credit unions need to be more diligent than ever now when it comes to managing risk and compliance.
"Credit unions need to focus as much as possible on title perfection and getting liens from the dealerships. The Cash for Clunkers hangover is going to hit dealerships like the morning after," Highbloom said.
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Highbloom explained that depleted inventory from the rush of sales from Cash for Clunkers, the slow rate of the issuing of checks from the government and the lull in sales that may take place in September could create cash flow problems at some dealerships.
"Its exciting to see growth because credit unions have filled a void, but at the same time the right paperwork flow and mitigation needs to be in place to manage that growth. Sometimes with a lot of growth things slip through because you're not paying as much attention," said Domingue.
Domingue suggested credit unions make sure they have the proper technology and documentation in place and have a system set up to detect fraud from the start, rather than catch fraud after the fact.
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