CUAG and Several Credit Unions, in their respective area, have joined together to establish themselves within the market of Point-of-Sale Financing. Currently, when a member purchases a vehicle, they must travel to the dealer to close the sale and then travel to the credit union to secure the loan. Under the new "indirect" lending program, the credit union will become a direct supplier of funds for the dealer to loan to applicble credit union members when they purchase a vehicle at their facility. The advantages to all parties are obvious; the member can both purchase the vehicle and secure a loan at the dealership, the credit union increases its loan volume, and the dealer's sales increase, therefore improving their bottom line.
Rather than each credit union entering this market individually, they have decided to utilize the services of CUAG as the loan originator. Their rationale for this arrangement is very logical: 1) They can reduce and share cost together as opposed to duplicating expenses working alone, 2) they can provide a more competitive and sound finance program, 3) working with automobile dealers can prove tough and arduous, this arrangement allows the credit union to turn all lending activities and daily involvement with the dealer over to professionals (CUAG) well knowledgeable in dealer operations and practices.
The proposed operation will provide this unique financial package to a much larger base of credit union membership and will offer this service at a reduced price. Thus, ultimately accomplishing the credit union's goal of better servicing the member.
- Retain members through the new automobile purchase cycle.
- Increase member service through Point-of-Sale Automobile Financing.
- Protect Member from faulty loan negotiations.
- Develop and improve Credit Union/Dealer relationships.
- Lower loan losses and default loans.
- Increase products and membership through cross-selling.
- Reduce loss of assets resulting from loss of member loans at the dealership.
- Reduce Credit Union overhead expenditures by utilizing an acceptance corporation and its inherently beneficial economy of scale.
- Increase your Credit Union's new auto loan portfolio.
- Increase your Credit Union's loan to deposit ratio.
- Obtain high quality dealer supervision.
- Increase member satisfaction with your Credit Union through readily available financing directly from the auto dealer.