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How After-Hours Underwriting Boosts Auto Lending

Increase profits by processing loans after your doors close.

After-hours underwriting is quickly becoming a must-have service for credit unions to compete for loan volume. Dealerships certainly aren’t confined to traditional banking hours, so if you are not aligning your underwriting services to their schedules, you’re missing out on profitable opportunities.

To help shed more light on why after-hours underwriting is so important, we asked a few seasoned experts to share their thoughts in the following interview. For this particular discussion, we contacted Maynard Hurd, AVP of Lending and Collections for Securityplus Federal Credit Union in Baltimore, MD, Sylvia Jaimes, Finance Manager at Jarrett Gordon Ford in Davenport, FL, and Tim McCurry, Manager of Account Management for CRIF Select.

Q: Starting from the lender’s perspective, how long have you used after-hours underwriting and how much of an advantage can it give you in the marketplace?

Maynard Hurd: Securityplus Federal Credit Union has used after-hours underwriting for approximately three years. A credit union that elects to provide this service outside its normal operating hours can minimize occurrences in which its members might be converted to other financing, as well as the chance of obtaining new members and loans. After-hours underwriting also assists in building good relationships with the dealers because they know you’re there when needed.

Q: On the other side, are dealers more likely to use lenders that offer after-hours underwriting?

Sylvia Jaimes: Yes, without a doubt. At our dealership, we do not offer spot delivery. I would need an approval before moving forward. We operate in a fast-paced environment where we can’t afford to wait. Approximately 65% of our deals are made outside traditional business hours, so it’s a big need for us.

Tim McCurry: After-hours underwriting has become more of a necessity for lenders than an added perk. More and more dealerships are going to a process that allows them to get approvals before they deliver the vehicle. With all of the big lenders using massive systems to render a decision, the personal touch and ability to talk to a live person is a huge advantage. Spot deliveries, especially for the customers with a little credit challenge, put the dealership at risk, which damages the customer’s experience.

Q: What’s the biggest benefit of after-hours underwriting?

Maynard Hurd: It provides credit unions the opportunity to serve their members outside normal operating hours and can deter dealers from sending member loans to other lenders. Other than that, it really strengthens dealer relationships because they are more likely to send their business your way if they know you’ll be there to accommodate their busy schedules.

Sylvia Jaimes: I agree. The biggest benefit for us is that it boosts our closing ratio.

Consider the times that your members are purchasing vehicles. Do you have a higher number of applications for autos in the mornings, especially on Mondays?

Tim McCurry: Building on those thoughts, after-hours underwriting provides flexibility to resolve issues on the spot. Should the desired package not be approved, lenders are available in person to discuss available options and hopefully save the deal. Having to not wait until the next business day is invaluable.

Q: The final question is about credit unions. What advice would you give other lenders unsure if after-hours underwriting is right for them?

Maynard Hurd: Those still on the fence about after-hours underwriting should consider the following:

  • Analyze your credit union’s resources.
  • Compare the costs of your credit union to maintain staffing for after-hours service to the cost of outsourcing.
  • Consider the times that your members are purchasing vehicles. Do you have a higher number of applications for autos in the mornings, especially on Mondays?
  • Is providing service to members who are purchasing a vehicle when the credit union is closed a priority?
  • Is improving and maintaining a good relationship with your dealers a priority?
  • Do you want to risk losing member’s automobile loans when the credit union is closed?
  • Does your credit union want the opportunity to receive loans you would otherwise most likely lose to another financial institution?
  • Is your credit union looking for ways to increase its membership and loan volume?

For Securityplus, the answer was clear, and the benefits have reinforced that decision. Through its Credit Desk Support service, CRIF Select offers after-hours underwriting for any credit union, regardless of size. We’ve discussed how far after-hours services will go to strengthen dealer relationships, but there’s more that can be done to establish and maintain these profitable ties with local dealers. For a complete list of things to consider regarding dealer management best practices, please click the button below to download our Indirect Lending Top 10 Checklist: Dealer Management.

Download Our Dealer Management Checklist

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
January 26, 2015

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