Indirect Lending for Auto Loans into Smaller Credit Unions

ALLENTOWN, Pa. – Mark Klucar says car dealerships in town are “stunned” when they find out his credit union can offer the same instant loan processing and approval prowess through DealerTrack as any of the big banks. Klucar is indirect lending manager for $229 million People First FCU in Allentown. His 45,000-member institution has been using the DecisionLender solution since late fall and has signed up three car dealers so far, a number the credit union aims to build. “The dealers can put the loan applications in and get good loan decisions from us right away, and they were stunned to find out that a credit union was even on DealerTrack,” Klucar says. “It puts us right up there with the good banks in town.” DecisionLender is an automated, Web-based loan origination, processing and decisioning application from Teledata Communications Inc. (www.tcicredit.com), a credit-access software firm based in Hauppauge, N.Y. TCI developed DecisionLender a few years ago as an ASP that now is run through a secure data center in Maryland. DealerTrack, with thousands of car dealers signed on across the country, is the largest of several companies that connect dealers and lenders for instant loan applications and processing. Koger & Williams Companies – which specializes in developing indirect lending programs for credit unions – contracted TCI to build a management system within DecisionLender’s routing system that enables credit unions “to participate in DealerTrack without the large upfront costs,” says Eddie Koger, one of the company’s co-founders. “The simple fact is that 80% of credit union members do their auto loans away from the credit union,” Koger says. “The primary reason for that is because the CU is not available at the dealership to make those loans, so it behooves credit unions to be there, so they can be at their members’ service and secure that business.” The consultancy (www.kwclending.com) is based in Chattanooga, Tenn., and has about 75 credit union clients, a customer base Koger & Williams is just now beginning to move onto the TCI platform, says Riley Williams, Koger’s partner and co-founder. “With this system we are able to make indirect lending available to credit unions that have not been able to do it for whatever reason,” Williams says. “This is a very simple, very cost-effective alternative to developing their own portal.” TCI’s president and co-founder sees the market potential, too. “There are about 1,600 credit unions doing indirect lending and they tend to be those with large assets,” Bill Nass says. “Using DecisionLender, credit unions don’t have to buy the hardware, they don’t have to buy the software, they don’t have to commit IT resources. They just need an Internet connection. “That makes it very affordable for small and mid-sized credit unions.” Nass and the consultants says the interface look and feel is customizable, as are functionalities such as loan ratio parameters and other decision drivers, and the product integrates with numerous core systems, including ULTRADATA, Symitar and several Fiserv platforms. It’s also not limited to DealerTrack at the dealer end. “We have one dealership that strictly does used cars and he loves our system,” says Klucar at People First. “He’s too small to go through DealerTrack so we set him up to go directly through our TCI system. He no longer has to take applications to the bank, and he knows right away whether it’s a good loan.” [email protected]