SAN DIEGO-It is estimated that by year's end, more than half the cars on the road will be leased vehicles, yet credit unions have captured less than 7% of that market, said Tim Mauricio, vice president of sales and marketing for Credit Union Leasing of America (CULA) here, a leading provider of leasing programs targeted to the credit union industry. It doesn't have to be that way, he said. Credit unions may think a leasing program is too complicated, said Mauricio, who stressed the most important thing a CU can do to recapture that lost business is design a program with the member's convenience in mind. Many CUs have realized that developing a good relationship with a car dealer network is also a key to increased membership (through indirect sign-ups of eligible buyers) as well, he said. The convenience factor struck a chord with Ed Hays, manager of vehicle leasing and buying for Navy Federal Credit Union, the leader in CU car leasing, according to statistics provided by CULA. "Our program is attractive because we made our leases member friendly," said Hays. "No money down, no security deposit, no early termination penalty, free GAP coverage, 15,000 standard annual miles, and the member may purchase the vehicle at the residual value, no matter how high the market value is." Hays echoed Mauricio on learning to work with dealers. "One of the most important things a credit union can do in establishing a program is to establish relationships with dealers that will offer members a fair price, a no hassle buying experience, and will honor our position as lender. When the member calls us and wants a lease, we refer them to a specific dealership. We only do leases in the areas where we have large membership concentrations- pretty much everywhere we have branch offices," said Hays. "When a member calls in or visits a branch office for an automobile loan quote our representatives also let the member know what leasing the vehicle through Navy would cost. It is casually mentioned to every member what the actual cost would be. All telephone representatives are trained to do this and we are currently working on training all the MSRs in the branch offices to do the same thing for walk-ins." Letting the member know up front cost comparisons fits very nicely with the CU principal of service first, noted Mauricio, and CULA offers a full array of marketing materials to support that educational effort. It also reinforces the member's feeling of trust in the credit union, he said. "This is a competitive imperative," said Hays. "If the member walks into a dealership with the note, the dealer is going to try to switch or sell them a dealer lease. In our case, the member is armed with information to compare Navy's lease rates versus the dealer's. We do this to cover all our bases so we don't lose market share. And the dealers know they can't beat our lease rates." What does Navy do with cars coming off leases? "We bring the vehicles back here to resell to members, employees, or the public through word of mouth (employees or members friends and neighbors)," said Hays. After putting them through a 72-point check and detail, a service contract is added and the car is sold. "It costs us about $400 per car but if we were to sell them at an auction, we would loose about $2,000 to 3,000 per car .We are currently selling between 10 -20 off-lease vehicles per month." "Our current portfolio is over 5,500 leases and over $135 million. We average around 150 leases per month," said Hays. -
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