The program helped provide a lifeline to the Auburn Hills, Mich., credit union's auto lending. The driving sense program allowed the credit union to end up with $22. 7 million in new vehicle auto loans at year-end 2008, an 80.2% growth over 2007. Without the program the credit union said they would have had $10.9 million in new auto loans, a 13.1% decline over 2007.
"We have never seen a better time for the driving sense product since the inception of AFG's business in 1999," said President Richard Epley. "It is a product that provides dealerships with a valuable financing option to keep customers coming in, credit union members with lower payments and credit unions with a higher yielding loan-a combination of features that is simply unmatched in the current marketplace."
Driving sense allows credit unions to offer lease-like benefits of a balloon loan and to build a vehicle for their members, compare payment terms with conventional loans, offer members lower payments and flexible two- to six-year terms and actual ownership of the vehicle and several end-of-term options.
During the months of August and September 2008, Cornerstone closed 52 new vehicle loans with the driving sense program, which brought in approximately $1.1 million in auto loans to the credit union. The fourth-quarter total, plus August and September of new vehicle loans equaled $11.7 million, which meant that 51.8% of the credit unions year-end total of new vehicle loans of $22.7 million was totaled in the last five months of the year.
In terms of the paper that is coming in on the loans, 42% of the credit unions indirect loans were A+ (730 and higher credit score), 20% were A (a credit score between 680-729), 17% were B (a credit score of 640-679) and 21% were C or lower in paper. The loans that were C or lower were originated prior to implementing driving sense. The credit union does not go below B paper on the driving sense loans.
"We are seeing excellent paper since we implemented this program, and I would feel safe saying that 92% of our paper on the driving sense product is A+," said Mary Pittenger, vice president of lending at Cornerstone.