Steer Clear How Credit Unions Help  Car Buyers Avoid Predatory Loans Bill Myers  [email_address]
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans that drive to work .  </li></ul>
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%.  Few...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
Non-Prime Auto Finance is BIG for CUs <ul><li>Percentage of Americans That drive to work.  </li></ul><ul><ul><li>88%. Fewe...
 
CUs Help Car Buyers Steer Clear of Predatory Loans <ul><li>Research funded by Annie E Casey </li></ul><ul><li>Partnership ...
Communicating Opportunity <ul><li>Low income </li></ul><ul><li>Low wage </li></ul><ul><li>Low-mod </li></ul><ul><li>Modest...
High Net Margins from Existing Members <ul><li>This marketplace has non-Competitive pricing. </li></ul><ul><li>Cus may pri...
<ul><li>Credit Scores are </li></ul><ul><ul><li>Fast </li></ul></ul><ul><ul><li>Inexpensive </li></ul></ul><ul><ul><li>Sim...
<ul><li>Credit Scores are </li></ul><ul><ul><li>Fast </li></ul></ul><ul><ul><li>Inexpensive </li></ul></ul><ul><ul><li>Sim...
Missing: 25% of the Population
Reduce Underwriting Gap <ul><li>Use more data sets in an automated decisioning process </li></ul><ul><ul><li>Ask and Verif...
 
Get in front of the dealer <ul><ul><li>Assist the member in finding a car </li></ul></ul><ul><ul><li>Credit Union Direct L...
Build the Loan Correctly   <ul><li>The Hard Close,  situation appropriate member education </li></ul><ul><li>Thank you for...
Insure the borrower <ul><li>Insure what they can’t control </li></ul><ul><ul><li>Collision </li></ul></ul><ul><ul><li>Mech...
Export the Risk <ul><li>Use  loan loss  insurance products and  guarantees . </li></ul><ul><ul><li>Lender’s Protection, a ...
Keep in Touch <ul><li>Allocate resources to collect the loan quickly </li></ul><ul><ul><li>Make contact with borrower when...
Bill Myers  [email_address] Steer Clear How Credit Unions Help  Car Buyers Avoid Predatory Loans
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REAL Solutions "Steer Clear" Auto Lending Summit Presentation

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Bill Myers's NCUF Steer Clear Auto Lending Summit presentation, July 22, 2008

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  • REAL Solutions "Steer Clear" Auto Lending Summit Presentation

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

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