Credit unions consider indirect lending to grow portfolios

Credit Union Loan Growth

Given the sluggish pace of lending in recent years, banks and credit unions alike are eager to expand their loan portfolios with high-performing loans. The recovering auto market appears to present a ripe opportunity for financial institutions that are interested in prime loans, according to a report, and some institutions could consider indirect lending as a way to acquire these assets.

Auto dealerships are expected to increase their sales pace this year to 805 vehicles annually, according to the most recent projection from automotive research firm Urban Science. That figure would surpass the previous record of 784 sales in 2005, demonstrating the fervor with which consumers are returning to car lots to purchase new vehicles.

That sales activity translates into auto loans, and this supply of indirect lending could be just what banks and credit unions need to bolster prime loan portfolios, according to a recent report from the Credit Union Times.

Tom Orman, an executive with the Credit Union of Southern California, told the source that indirect lending may become a favored strategy for credit unions that wish to boost loan growth. And if that is the case, credit union executives will need to consider their credit application processing framework to determine if it is suited to handle an expanded relationship and reliance on indirect lending from auto dealers.

Credit Union Indirect Lending Software

Leading credit management software can deliver this framework, offering customizable tools that allow credit union and bank executives the ability to evaluate loans from dealers and determine which are performing best. Sophisticated software offers expanded reporting tools and automated decisioning to help ensure that when banks grow their loan portfolio, they hit the mark more often than not.

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