Refis accounting for growing piece of CUs' auto loan portfolios

WASHINGTON – Credit unions are accustomed to refinancing members' mortgages, but findings from a recent study by Callahan and Associates show credit unions are flexing their refinancing acumen and targeting refinancing activities at members who have outstanding auto loans from other lenders, as well "Credit Union Auto Lending: Creative Approaches for a Competitive Industry" shows 69% of respondents said they target members with outstanding loans from other vendors, and 22% of auto lending by credit unions in 2001 was for refinanced vehicles. In addition, the greatest number of respondents – about 43% – generated 16-30% of refinancing activity as part of their auto lending activity in 2001. With the auto loan market being as highly competitive as it is, credit unions are having to resort to using a number of ways to promote their auto loans. The study results showed that 60% of credit unions accepted loans from non-members in 2001 through indirect lending or the credit union's Web site. The non-members joined the credit union to complete their transaction, so the credit union gained on two fronts. Fifty-seven percent of respondents said they participate in indirect auto lending programs. In the first quarter 2002 these programs generated $4 billion in lending for credit unions with more than $50 million in assets. Responding credit unions have incorporated the Internet into all stages of the auto lending process. Nearly all said they accept auto loans over the Internet, and 52% said they also provide online approval. "Credit Union Auto Lending: Creative Approaches for a Competitive Industry" expands on a 2001 Callahan study, "Indirect Lending: Opportunities and Challenges for Credit Unions" that focused exclusively on indirect lending. Of the more than 1,500 CUs from all asset categories that were invited to participate in the new survey, 180 CUs representing 19% of the industry's assets responded. The financial analyses presented in the report reflect March 2002 data from responding credit unions with greater than $50 million in assets. The new 45-page report is available online on the "bookstore" page of www.creditunions.com.