Speed Up Indirect Approvals, CU Lenders Warned
LAS VEGAS -- After years of what were described as "troubled relationships," credit unions are now getting high marks from auto dealers on their ability to bring in profitable business, an automotive publisher and former Evansville, Ind. dealer told CU loan executives here.
"The scars are healed," from the days when CUs would bluntly tell their members rates were too high "and they were paying too much" at an individual dealer.
Or CUs would skim off finance/insurance products for themselves leaving little for dealers, declared Greg Goebel, president/CEO of Auto Dealer Monthly and former manager of dealerships in southern Indiana and northern Kentucky.
Goebel, who spent 18 years in the dealer business and who now runs a Sarasota, Fla. consulting and training business, was a keynote speaker at the ninth annual Auto Lending Symposium of Credit Union Direct Lending held at the Venetian Resort Casino.
"I know we're a perplexing group of people," admitted Goebel in describing his fellow peers. Yet, he said, CU staffers and dealers are starting to get along much better according to a 2007 national survey his magazine took of 287 dealers.
"Some wrote passionately about their good relationships with credit unions," recounted Goebel in maintaining that he was pleasantly surprised to find such a reaction. "One dealer, in fact, said he made $500,000 in profit last year as a result of my relationship with a credit union." Neither the CU nor the dealer was identified.
In his talk, the Sarasota consultant suggested CUs still have work to do in learning how to improve methods to court finance managers, a key figure in dealerships. The top brass of the CU may have a good rapport with the dealer/owners, but the finance team often "calls the shots" in the selection of financial institution lenders.
It is important that CU staffers "earn the confidence" of the finance manager, said Goebel reminding the CUDL audience that they are often paid on commission.
In citing CU criticism in the survey, Goebel noted that several dealers expressed frustration at long delays in loan approvals at CUs as well as cumbersome paperwork.
In many cases, banks and the captives are way ahead of credit unions with approvals coming in minutes or in pre-approvals, he said.
"Even if the credit union offers as much as a full point cut in rate and it takes a day to get the approval, the dealer will go with the institution that has the fastest approval," said Goebel.
The same goes for funding procedures since the dealer finds some CUs slow in handling title applications and perfecting liens.
Areas which have long remained "battle areas" between CUs and dealers center on service contracts, GAP protection and credit insurance, but conditions have improved there with CUs becoming less strict on what dealers sell. "But there will always be competition," he observed.
In his talk, Goebel praised the CUDL platform as highly effective maintaining "widespread acceptance" by dealers adding he hoped more CUs would join.
"CUDL is now a significant force in the indirect market," Goebel concluded.