Let's say a couple – we'll call them Calvin and Mary – walk intoto a dealership looking for a minivan with seating and safetyfeatures to cart around two young kids, a neighbor kid or two andheavy loads of groceries.

The dealer has an indirect loan relationship with the creditunion, the couple does not. The couple is interested in a 2018Honda Odyssey EX-L.

They're planning that big trip to Orlando next summer, takingalong grandma and her miniature poodle Alfie. And, of course, thesweet kids, Harvey, 3, and Maria, 5. This will be epic.

Calvin and Mary have planned every detail, so of course theyhave taken keen notice of the Odyssey's electronics. They arebuying a rolling movie theatre.

The price? $38,300.

The dealer says they can sign a 39-month lease for $472 a month.The lease assumes the minivan will be worth $23,363 when it comesoff lease. It will have suffered only normal wear and tear, andwill have been driven no more than 12,000 miles per year. Forsimplicity, the deals assume no down payments and exclude taxes andfees.

He also offers them a 60-month loan for $664. How much would a39-month loan cost? $1,018.

For many families, $500 a month is a lot of money. They couldshift down to a low-mileage used minivan. But then what if thetransmission died on the drive to Orlando? And how could they driveall those miles without the kids getting bored (or grandmasuggesting a sing-along)?

They could run the numbers for a longer-term loan, but they'dhave to get something close to an eight-year loan to get theirpayments close to $500. At that point, of course, they might be inthe market for a transmission — or braces for Maria.

They would be driving upside down for the life of the loan,which pretty much would be the life of the car.

Lease rates for new cars have been growing, as new car pricesrise and loan terms have stretched beyond 85 months.

Credit unions often avoid the lease market, in part, because itpresents unusual risks or requires unfamiliar deal structures. Butcredit unions' increasing participation in indirect lending meansthey're in the same room with shoppers who lease. Avoiding leasingmeans turning away a chance to forge a bond with them.

Consumers use leases to obtain more than 30% of all new cars, asleasing becomes more popular for consumers in all risk tiers,according to Experian. Lease rates are up from 25% in 2012.

At the same time, new car loans are getting longer. The averageterm was approaching 69 months last spring, and some terms arebeing offered for up to 96 months.

Monthly payments on new cars remain near record highs: Anaverage of $504 for loans and $412 for leases.

The eco-system of indirect lending has allowed the growth ofleasing companies catering to credit unions since Terry Bowdlerfounded Credit Union Leasing of America in San Diego in 1994. WhenCULA was acquired in June by Westlake Financial Services of LosAngeles, it had about $1.5 billion in leased vehicles.

Fusion Auto Finance was founded in 2004 by CEO and majorityowner Jim Calvert. At the same time, he acquired Novak Motors toserve as a retail outlet for off-lease vehicles, which now hasdealerships in the Dallas-Fort Worth and Long Island areas.

Calvert had been handling leasing for the U.S. sales arm ofMercedes-Benz, and he brought with him other Mercedes-Benzemployees with deep experience in managing different aspects of theleasing business.

They include Don Porter, vice president and chief operatingofficer and Chris Meagher, director of sales and marketing.

In 2007, Fusion and GrooveCar of Hauppauge, N.Y., formed a jointventure called CU Xpress Lease to allow credit unions to offerleases. GrooveCar provided the indirect lending platform, marketedthe program to dealers, acted as a liaison on behalf ofparticipating credit unions. Fusion acted as the titled owner ofthe cars through vehicle loans from the credit union.

The credit union owns the payment stream from the lease holders,but is shielded from the risks and hassles of selling cars as theycome off leases. Before the lease is signed, Fusion guarantees thatwhen the car comes off lease it will pay the credit union a setamount based on its estimate of how much the car will be worth.

If the car's value remains above that estimated residual value,Fusion profits. If the car's value falls, Fusion loses.

“Not every vehicle is a winner,” Meagher said. “Every residualvalue is wrong. The question is how they're wrong. It's a blend ofscience and art to arrive at residual values.”

CU Xpress Lease's first client was Teachers Federal CreditUnion, also based in the Long Island town of Hauppauge.

Teachers ($5.7 billion in assets, 281,098 members) signed itsfirst leases in 2008. With the recession, people who needed carsalso needed lower monthly payments, Francis Collins, SVP of credit,said.

“Leases really took off,” Collins said. “It's grownexponentially since that time.”

Teachers funded $133 million in leases in 2013, $370 million inleases last year, and is on track for $377 million in leases thisyear. Last year leases accounted for about 70% of its indirect autoloan originations.

Meanwhile, CU Xpress Lease has a portfolio exceeding $5 billionand more than 100,000 vehicles.

Last year, Fusion bought about 22,000 vehicles as they enteredleases to consumers, and is on track for similar volume this year,Meagher said.

“We're looking for clients who have an appetite for thebusiness, who want indirect lending to be a big part of theirlending,” Meagher said. “In the last few years credit unions haveincreased their share of indirect lending, so why wouldn't theyshare in that growth in leasing as well?”

In August, Fusion announced it had purchasedGrooveCar. Meagher said Fusion will expand CU Xpress Lease intoother market, including south Florida and southern California.

“With the right amount of resources and focus, all theirbusinesses can be expanded exponentially, and that's what we intendto do,” he said.

CU Express Lease established a toehold in southern Californialast fall with Credit Union of Southern California ($1.2 billion inassets, 94,127 members). It's based in Whittier, Calif., and servesresidents of Los Angeles, Orange and San Bernardino counties, whereabout half of new cars are leased.

Most of CU SoCal's auto loans are direct, but it has developedits indirect program and has been looking for ways to find moremembers and expand its portfolio, Stefan Parker, CU SoCal's vicepresident of consumer loan underwriting and loan servicing,said.

“We noticed we were losing a lot of sales to leasing,” Parkersaid.

Participating in leasing would have been difficult for CU SoCalwithout a guarantee of being funded a fixed price for a residualvalue.

“It's inherently risky at loan maturity, because if you're wrongon the value when the member brings back the car, you're subject totake a big loss.

CU SoCal was attracted to Fusion's model. It has the analyticsto determine the residual value at each maturity and gives thecredit union the guaranty, while allowing the credit union to useits experience evaluating buyers' ability to pay.

CU SoCal began making leases last November through a Hondadealer and now has about 50 leases on the books. Two more of its 25active indirect dealers will be offering its leases by the end ofOctober.

Michelle Hunter, SVP of marketing and development, said CU SoCalis monitoring its experience maintaining and building itsrelationships with members who arrive via a lease or an indirectloan.

“It is a tough nut to crack,” Hunter said. “I don't know of anyother credit union that has successfully onboarded indirect membersto become loyal and have that deep product penetration. But it issomething that we're not ignoring but we are keeping an eye on, sowe're not overly investing in a channel that really isn't going togarner any results.”

CU SoCal is still drawing most of its members directly. InAugust, for example, it gained 102 of its 1,251 new members throughits indirect channels.