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Neighborhood CU Sees Rapid Growth in Auto Loans
Monday, June 24, 2013 9:40 AM

Thanks to the continued macroeconomic recovery, aging vehicles on the U.S. roads and strong demand for commercial vehicles from businesses, auto sales in the U.S. reportedly grew 8.2 percent. In the Dallas area, new car and truck sales reportedly resumed their rapid growth in May – increasing 14.6 percent over May 2012. Michael Roark, senior vice president of lending with Neighborhood CU says the Dallas-based credit union is experiencing significant growth in auto lending.

Question: With auto sales growing in Dallas area, is Neighborhood seeing an increase in new auto loan applications?

Roark: Yes. We have received about 20 percent more applications this year over this time last year.

Question: How do the first 5 months of this year compare with the first 5 months of 2012?

Roark: First five months of 2012, we experienced 6.38 percent growth in direct new autos; while in the first five months of 2013, we experienced 24.38 percent growth in direct new autos.

Question: What type of strategies and/or promotions has the CU deployed to stimulate growth in auto lending?

Roark: We have a constant “drip” campaign to market our auto loans. While our rates are low, we have other great finance features such as 90 days until first payment.

Question: How difficult has competition been with dealership financing?

Roark: The Captives are tough to compete with. As I tell my peers, “no matter how low you think your rates are, the captives will always have lower rates.” Therefore, it’s up to us to show (not just tell) our members that Neighborhood is the better deal.

Question: What 5 tips can you offer other CUs to generate more auto loans?

Roark: 1. Streamline your processes. Your shop has to be able to respond quickly to member demand. 2. Don’t be afraid of LTVs over 100 percent. Many good members are upside down. Remember, the collateral doesn’t make the payments, your member does.3. Your Tellers are an excellent source for referrals; especially those working the drive through.  4. Be willing to make concessions with rate and term when circumstances dictate. Make sure your Policies allow you to do this. 5.  If you can’t fully approve an application; don’t decline it. Many members will accept a counter offer such as shorter term, more down payment or a combination of both.