Post on 13-Jan-2015
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Lifestyle Lending
Credit Union Services andProducts Forum
2012
Agenda
• The State of Lending Today• What is Lifestyle Lending• The Impact of Lifestyle Lending• Credit Union Benefits
The State of Lending Today
• Total Loan Growth– April 2011 – April 2012: + 2.3%– 2012 Year to Date: +.1%
• Vehicle Loan Growth– Positive for the first time since 2005 in both time
frames
The State of Lending Today
• Auto Loan Market Share – January 2012: 17.4%– Steadily above 17%– 29% of credit union loan portfolio (by dollars)– 32% of credit union loan portfolio (by units)
The State of Lending Today
• Loan to Asset ratio– 2000 – 70%
– 2006 – 71%
– 2012 – 59% (forecast by CUNA Mutual Group)
The State of Lending Today
• Loan Growth Rate– 2000 to 2009 - + 5% to 10%
– 2009-2011 – negative
– 2011 – turned positive - +1% to 2%
What is available other than auto loans?
• Mortgage lending• Increased from 4% to 5% in 2010 to 8+% today
• Student loans – private lenders
• Personal property loans
Are we concernedabout the unknown?
Is it safer to be part of the herd?
Lifestyle Lending
What can be Financed?
• Medical– Cosmetic Surgery– Dermatology– Hearing– Infertility– Dental– Veterinarian– Vision– Surgery
What can be financed?
• Retail– Heating and A/C– Pianos– Hot Tubs– Home Improvement– Water Softener– Furniture– Pool Tables/Gaming
What is Lifestyle Lending (NOT)
• Indirect lending model
Member
Auto Dealer Credit Union
Application
Credit Data
Credit Decision
Retail Contract Purchase
Loan Relationship
What is Lifestyle Lending
• Direct lending model
Member
Retailer
Credit UnionApplication
Credit DecisionFunding
Credit Decision
Funding
Loan RelationshipApplication
How it Works
• Credit Union Places link on its website for the Lifestyle Lending system
• Member accesses credit union website to locate retailer/provider
• Member reviews deals, discounts & financing• Member applies for financing (retailer, cu or
online)
How it works
• Member and retailer/provider connect for services/products
• Retailer/provider receives notice of decision• Retailer/provider finishes loan paperwork and
returns to credit union (digital signatures)
Integration in Processes
• Applications• Credit Decision• Approval/Denial notice• Funding• Billing
The Competition
The Competition
• Credit Cards• Charge retailer/provider 6%-12% of Amount
Financed depending on the discount• Rate increase if a default• Promotional Programs– 0% for 6 to 12 months– 90 day “same as cash”
What a credit union can expect?
• Over 12,000 applications submitted• 718 Average FUNDED Credit Score• 663 Average APPLICATION Credit Score• Over $12,000,000 funded• $3,822 Average Amount Funded• 13.27% Average Funded Interest Rate• < 1% Delinquency Rate
Benefits to Member
• Easy to locate retailer/provider• Research tools – Better Business Bureau link– Exclusive discounts– Direct link to retailer/provider site
• Easy online application
Benefits to Retailer
• Marketing Channel• Retailer may target discounts to CU members• Generate more business• Reduce financing costs
Benefits to Credit Union
• MORE LOANS!!!!!!!
• Forms auto-populated
• Reporting
• Assistance developing retailer/provider network – first place to look?
Benefits to the Credit Union
• 93% are NEW members
• Build Business Services
• Integrate into the community/Brand Awareness
Is it the Unknown?
• Do you make loans today? Yes• Do you make loans today for personal
property? Yes• Do you decision loans today? Yes• Are you seeking new members today? Yes• Are you seeking business relationships today?
Yes