Indirect Lending: Yea or Nay?

CU lenders debate the wisdom of obtaining loans through auto dealers.

July 02, 2013
KEYWORDS credit , indirect , lending , unions
/ PRINT / ShareShare / Text Size +

Do credit unions do a disservice to members via indirect lending? Or is this practice a powerful tool that allows members to obtain loans when and where they want?

That was the “great debate” between two credit union lenders: Dawn Wade-Brummett, vice president of retail lending and operations for ORNL Federal Credit Union, Oakridge, Tenn. (above, left); and Jim Holt, CEO of MidAmerican Credit Union, Wichita, Kan., (above, right) during the America's Credit Union Conference Monday afternoon.

David Polet, CUNA Mutual Group’s director, voice of customer, moderated the discussion and polled the audience on its views of indirect lending: 58% said they believe it’s a member-focused service, while roughly 30% disagreed somewhat with that statement.

“We must get past the stereotype of the shady dealer,” said Wade-Brummett, an indirect lending proponent. She said reputable dealers often get lumped in with those that are irresponsible—similar to how credit unions sometimes are unfairly equated with banks.

“Indirect lending is about empowering members to get loans when and where they need them,” Wade-Brummett said. “Credit unions should do due diligence with dealers like they do with all vendors—and they should never give up control of underwriting.”

Holt, meanwhile, applauded the 30% of session attendees who “had not gone over to the dark side” by working with auto dealers. “It’s not good to send members into a high-pressure situation where they will be sold high-priced products.

“And do we want the people the dealers send us?” he continued. “Less than 20% of these people even qualify for other services.”

Wade-Brummett offered a firm “yes” to that question. “We want these members, and every credit union should. These people live in your community. They may not fit your model, but credit unions need to extend services to those who need them. Let’s introduce ourselves to them.”

That’s fine, Holt said, “but I don’t want the first contact a member has with us to be a sales guy at a dealership. I want that to be with my employees, who’ve been properly trained and coached. We have trained loan officers who can fit them into the right deal—and maybe change their mind from buying a Cadillac to a Taurus.”

Be sure to visit News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in New York City. You can also follow ACUC on Twitter using the links below:

News Now LiveWire
Credit Union Magazine
CUNAVerse

Members Choice

Will Scott
July 02, 2013 1:44 pm
Whatever we want our members to do and how we want them to do it, becomes more obsolete each day. It's all about serving the members the ways in which they want. If they feel more comfortable at a car dealership, having an option to finance through a credit union, I support what they want and will serve their needs. Most potential new members want to borrow money. Why not make it easier for them to do it with us?


Flag Comment as Offensive

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive