Credit Lending: An Important Part of Auto Financing

Credit unions continue to grow at a rapid pace, which is no surprise because credit lending is an important part of auto financing. Membership in these financial organizations has skyrocketed lately; in fact, the number of members passed the 97 million mark over the past year. The increasing popularity of credit unions doesn’t mean that these nifty financial orgs can just sit back and become complacent, however. In order to remain vital contenders in today’s fiercely competitive marketplace, innovative credit lending tools and software systems must be utilized.

Auto Financing

Why are Credit Unions so Popular? 

Since the 1900s credit unions have been the crowd-pleasing alternative to traditional banks. Banks are profit-driven machines that make money off of their customers, while CUs are user-friendly cooperatives owned by their membership. At banks, customers pay higher interest rates on loans; earn lower rates on savings accounts, and pay a slew of tacked-on fees for everything from ATM usage to cash advances. Credit unions only charge their members enough to pay operating costs, as they are non-profits, not driven by their bottom line. Rates offered to members for auto financing, credit cards, and mortgages are extremely favorable at these nonprofit financial institutions, especially when compared to those offered by other lenders. With all they have going for them, no wonder credit unions are thriving.

Remaining Competitive 

In order to remain competitive in the auto-financing marketplace, credit unions must stay ahead of the curve by embracing new products, tools, and ways of doing business, as complacency can lead to closed doors. Amidst all the growth, there were still more than 200 credit unions that went out of business over the last year. One tool that has recently become available to help each cooperative retain its cutting edge is insight-lending software. Lending software allows for better oversight and profitability. These programs can do plenty, including:

  • Reduce Risk: With the right set of computerized tools, a CU can access reports, scorecards, and metrics to give them insight into loans, trends, applicants, and the marketplace as a whole. Armed with information about credit tiers, collateral, and loan product types, each organization’s financial risk can be minimized and the number of delinquencies decreased.
  • Adhere to Regulatory Rules: Banks and credit unions must meet specific requirements in order to remain compliant with regulatory monitors. Computer software with compliance details built in can take the guesswork out of all the red tape. The software programs can also generate reports and necessary financial data, and do the work of multiple staff members, cutting costs while increasing efficiency.
  • Enhance Loan Profitability: Lending can become more profitable with software programs designed to generate analytics and reports. This capability is helpful with credit union auto buying programs, home equity loans, and mortgages. With intuitive computerized systems, CUs can enhance lending capabilities on multiple fronts.

Although their members own credit unions, they still have to operate as savvy businesses. To keep their balance sheets in the black and their ducks in a row regarding regulatory compliance, CUs must take advantage of the most innovative tools available.

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