Credit unions with indirect lending programs experience much higher auto loan
growth than those without. These programs enable members or nonmembers to apply
for financing with a credit union at the dealership.
Since credit unions have the ability to sign up new members at the dealership
member growth is also stronger with indirect lending programs (see table).
Midyear data reveals more than half of all credit unions over $50 million
in assets have indirect loans on the books. However, this type of program can
work for credit unions of any size.
There is a significant investment required to establish and run a successful
indirect lending program. While larger credit unions are generally the strongest
performers, more than 130 of the 1,450 indirect credit union lenders are under
$20 million in assets.
At midyear indirect lending topped $45 billion for the credit unions, constituting
over 11 percent of the entire industry’s loan portfolio.
For Credit Unions over $50M |
1,004 CUs with Indirect Program |
986 CUs without Indirect Program
|
All 1,990 CUs over $50 million in
Assets |
| Total Auto Loan Growth |
14.9% |
6.2% |
12.4% |
| New Auto Loan Growth |
18.3% |
6.5% |
14.8% |
| Used Auto Loan Growth |
12.3% |
6.0% |
10.5% |
| Member Growth |
3.7% |
2.5% |
3.2% |
Research in Local Markets Yields Success
An essential component of a successful indirect lending program is
tracking credit union performance and local market share. Armed with this knowledge,
credit unions can make strategic decisions to target specific dealers potential
for business expansion.