Auto lending continues to be a driver of strong credit union loan portfolios, representing 38 percent of total lending balances outstanding. Travis Credit Union ($1.5 billion in Vacaville, CA) is no exception, with auto loans accounting for 57.2 percent of its loan portfolio as of June 30, 2005.
However, as with any lending there is a risk potential, especially as expanded charters attract new members with diverse credit profiles. This risk potential does not diminish the opportunity inherent in auto lending, but it is leading credit unions likeTravis to dedicate more efforts towards remarketing.
According to Misun Thompson, assistant vice president of collections and insurance services for Travis, three practices contribute to the success of the remarketing program and are things that all credit unions should consider when it comes to remarketing.
- USE TECHNOLOGY. Having the right tools to ensure optimal efficiency is critical in vehicle remarketing where time is literally money. Travis is currently using a tracking and communication software tool that creates greater transparency and reducespotential delays and miscommunication. Technology such as this enables credit unions to reduce manual processes and use employee time more effectively.
- CREATE STANDARDS. In addition to Thompson, Travis has two full time collectors. Given the focus on time and efficiency, this team has set goals related to time between notice, repossession and resale. As part of this, staff is both held accountableand offered incentives. Credit unions working with third parties to remarket their vehicles should also hold partners responsible for meeting agreed upon standards.
- DO THE ANALYSIS. Scale is important when it comes to vehicle remarketing. Currently Travis averages 60 cars per month ready for remarketing and another 40 cars as potential repossessions. Even with this scale it considered working with a third party,but after researching the possibilities and doing the cost-benefit analysis Thompson concluded that the in-house program was more efficient and equally as successful. This decision may not be appropriate for all credit unions, but all credit unions should consider all options as they design their remarketing program.