RANCHO CUCAMONGA, Calif. – What does it take for credit unions to increase their indirect lending market share? CEOs and lending executives from auto lending CUSOs joined others from leading credit unions recently at the first national indirect auto lending summit hosted by Credit Union Direct Lending to discuss the issues, such as manufacturers' 0% financing offers, that are affecting CUs' share of the auto lending market. Among the topics discussed were strategies on how to work most effectively with dealers, ways to aggregate credit union volumes, and ways to present and enhance credit union value to members and dealers. Some of those who attended the two-day summit was Larry Biernacki, senior vice president, San Antonio FCU. The $1.5 billion SAFCU has about $720 million in its indirect auto lending portfolio. In addition to handling indirect auto lending for the CU's more than 222,000 members, SAFCU's CUSO – Credit Acquisition Resource Services (CARS) also does indirect loan purchasing for two credit unions in San Antonio and three in Houston. The credit union did $417 million in indirect loans in 2002 – about $35 million a month – and CARS did an additional $42 million in indirect loans. SAFCU's indirect auto loan portfolio grew 14.0% in 2002. Biernacki said credit unions' ability to compete in the indirect auto lending market and grow their loan portfolio comes down to one word – "relationships." "When you have a good relationship with the dealerships, that's what drives your volume," said Biernacki, adding that credit unions can't get complacent with those relationships. "You have to be willing to put in the time and effort to work and cultivate them," he said. Biernacki speaks from over 16 years experience working with SAFCU's indirect lending program. The credit union currently has relationships with 200 dealerships between San Antonio and Houston, and it is the only credit union that is on the Dealer TrackT Web-based auto finance platform that connects lenders with dealerships. "Credit unions have to ask themselves `why would a dealer want to send a loan to them rather than to a bank?' The dealer has to be comfortable you're going to consistently send them credit qualified people. You don't have to necessarily offer the lowest rate in town, but the dealer has to be comfortable with who you are, what you stand for, and what you do," said Biernacki. The SAFCU executive said one of the differentiating elements of the credit union's indirect lending program is it allows its loan officers to build relations with the dealerships. Neither the credit union nor the CUSO uses field reps. "The loan officer is the one approving the loan, so they need to be the one building the dealership relationship," he explained. That doesn't mean, Biernacki added, that a credit union shouldn't have account reps, "but they should be someone who can be transferred in to a loan officer." In addition to the brainstorming sessions on building credit unions' indirect lending portfolios, attendees agreed to complete a third-party study on the most effective indirect auto lending models and best practices and to form a coordinating committee to develop indirect lending opportunities that were discussed over the two days. -

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