Many financial institutions in America are visiting the topic of indirect auto lending. Some are considering entering the business for the first time. Others are evaluating re-entering the business, while others are considering expanding their existing programs. At the same time, some wish to exit the business.

What is going on? Why would a lender consider entering or expanding in the indirect auto lending arena?

For one thing, indirect auto lending offers an ability to generate consumer loan volume and build members with minimal marketing expense. It also offers an opportunity to cross sell and up sell additional services to newly originated members, thus expanding an institutions share of wallet. Current economic conditions have reduced the number of traditional competitors and reduced the barriers to entry to this line of business, making indirect lending an easy line of business to enter or expand. And dealers are searching to develop relationships with lenders who are committed to providing consistent lending decisions over time-not hot and cold or in and out of the market. Indirect lending pricing opportunities and operating efficiencies can lead to higher returns than branch originated consumer loans.

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