Date post: | 13-Jan-2015 |
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Economy & Finance |
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Steer ClearSteer ClearHow Credit Unions Help How Credit Unions Help
Car Buyers Avoid Car Buyers Avoid Predatory LoansPredatory Loans
Bill Myers Bill Myers
[email protected]@realsolutions.ncuf.coop
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans that drive to work.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assets.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assetsPercentage of 8 million used cars sold to low and moderate income borrowers annually that Cus finance.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assetsPercentage of 8 million used cars sold to low and moderate income borrowers annually that Cus finance
5%
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assetsPercentage of 8 million used cars sold to low and moderate income borrowers annually that Cus finance
5% Credit Unions 30% Banks 60% sub-prime lenders
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assetsPercentage of 8 million used cars sold to low and moderate income borrowers annually that Cus finance
5% Credit Unions 30% Banks 60% sub-prime lenders
50% of CU loan applicants are turned down. If credit unions lend
Below FICO 600, their market is expanded by 15%. To no FICO, their low mod market is expanded by 40%.
Non-Prime Auto Finance is BIG for CUs
Percentage of Americans That drive to work. 88%. Fewer than 5% take public transportation to work.
Percentage of US auto finance market that CUs captured in 2007.
15%. $90 billion in used cars loans, 12% of CU assetsPercentage of 8 million used cars sold to low and moderate income borrowers annually that Cus finance
5% Credit Unions 30% Banks 60% sub-prime lenders
50% of CU loan applicants are turned down. If credit unions lend
Below FICO 600, their market is expanded by 15%. To no FICO, their low mod market is expanded by 40%.
How big is this market?
CUs Help Car Buyers Steer Clear of Predatory Loans
Research funded by Annie E CaseyPartnership between
Aspen InstituteNational Credit Union Foundation
Survey of 251 Credit UnionsInterviews with
12 Credit Unions8 Vendors
SEVEN LESSONS
Communicating Opportunity
Low income
Low wage
Low-mod
Modest means
Low score
No File / thin File
Underbanked
Unbanked
Underserved
Sub-prime
Non-Prime
Emerging Market
Base of the Pyramid
High Net Margins from Existing Members
This marketplace has non-Competitive pricing.Cus may price Non-prime loans for risk and effort.
Members still receive a much better deal.
This need not be charity work
1
Credit Scores areFastInexpensiveSimplify loan pricingCompetitive
Since all lenders have the same dataNo relationship needed
Not subjectiveNon-discriminatoryUniform
Derive from one data source (credit repayment records).
Reduce Underwriting Gap2
Credit Scores areFastInexpensiveSimplify loan pricingCompetitive
Since all lenders have the same dataNo relationship needed
Not subjectiveNon-discriminatoryUniform
Derive from one data source (credit repayment records). Incomplete
Reduce Underwriting Gap2
Missing: 25% of the Population
Reduce Underwriting Gap
Use more data sets in an automated decisioning process
Ask and Verify
Bill payment, Utility records, Rental payments
FICO Expansion Score Fair Isaac
L2C score TransUnion
eBureau Experian
Market Max Equifax
RiskWise Lexis Nexis
2
Get in front of the dealer
Assist the member in finding a carCredit Union Direct Lending CUDL
http://www.cudl.com/ United Buying Service
http://www.ubs4cars.com/ Motor Vehicle Certification Program
http://www.mvcp.com/intro.php Cars for Members
http://www.carsale.com/ Auto Resource Center
http://www.cucompanies.net/pages/auto_about_us.asp Auto finder Autoland
http://www.autoland.com/ Enterprise Car Sale SmartBuys program
http://enterprisesales.com/
3
Build the Loan Correctly
The Hard Close, situation appropriate member education
Thank you for the businessValue of membership
Verify loan application informationEmployment, residence, references, Photo of car
Review all Loan termsPayment amt and due date
Value of on time paymentInsurance requirementsLate fee and penalties
Keep in touchContact CU if there is a problem
Cross sell (Just in Time Education)Direct DepositAutomatic PaymentSavings Escrow
Guaranteed Refinance offer
4
Insure the borrower
Insure what they can’t controlCollisionMechanical Breakdown Insurance or extended warrantyGAP loan deficiency or residual value insuranceDebt Cancellation for divorce, injury, loss of jobCredit Life
Walkaway: Give the car back, no further collection or credit degradation.
5
Export the Risk
Use loan loss insurance products and guarantees.
Lender’s Protection, a risk pool
Charlie Mac CARPooL program
Guarantees (Pride Deposits)
6
Keep in Touch
Allocate resources to collect the loan quickly
Make contact with borrower when one day late
Premium to borrower for visiting Collection Officer in person:
$50 Pre-Paid card
Repossess when 30 days late.
7
Bill Myers Bill Myers
[email protected]@realsolutions.ncuf.coop
Steer ClearSteer ClearHow Credit Unions Help How Credit Unions Help
Car Buyers Avoid Car Buyers Avoid Predatory LoansPredatory Loans