While the overall auto lending market is shrinking, auto lending market share for credit unions reached a 3-year peak of 18.6% in September, 2008 (Callahan, 2008). Many national banks and larger lenders have pulled out of near prime lending including GE and GMAC. In this environment, credit unions are now poised for solid growth and the opportunity to serve even more members.
However, effectively capitalizing on this opportunity while wisely managing risk means credit unions need an integrated insurance service with the ability to offer true risk-based pricing. One option for this service is Lenders Protection, an offering from CUNA Mutual Group. As an example, Lenders Protection reviews numerous risk factors and determines the appropriate LTV, Price and Loan Amount. Lenders Protection will insure the loan against default and will allow CUs to offer up to 120% LTV auto loans.
To leverage a service like Lenders Protection, credit unions need to have in place a loan origination system (LOS) with automated decisioning. Before a credit union uses Lenders Protection, they will review the credit union’s portfolio and policies to come up with appropriate pricing and a best practice decision workflow that will then be implemented into the process.
The LOS will automate pricing based on numerous variables and seamlessly integrate with Lenders Protection for loans that fall outside of prime credit guidelines.
Teres Solutions’ SAIL (Software Application for Integrated Lending) is a Loan Origination System that integrates tightly with Lenders Protection. In fact, more credit unions integrate to Lenders Protection using SAIL than any other LOS. This process takes place in seconds in the SAIL system, allowing credit unions to better serve members while astutely managing and reducing risk.
To learn more about Teres Solutions visit: www.TeresSolutions.com and to learn more about Lenders Protection visit: http://www.cunamutual.com/cmg/freeFormDetail/0,1248,8905,00.html.