Credit unions trying to boost their auto loan portfolios now have an added aid, a Non-Prime Auto Loan Toolkit. Many households are struggling financially and a dependable automobile can be the key to having a job or having a better paying job. Many of these households may look at the corner buy-here-pay-here auto lot as their only option and find themselves caught in a costly loan and an unreliable car.
There is tremendous opportunity for credit unions to reach out to this market that has been mis-served by predatory and non-traditional lenders. The estimated size of the non-prime auto market ranges from $100 billion to $200 billion. Yet, as credit unions put more non-prime borrowers into automobiles, they need to do so prudently and with clear understanding of the increased risks they are undertaking. The toolkit is designed to help guide credit unions through some of these dangers. The toolkit also suggests Enterprise Car Sales as one option for a quality car at a good value.
The toolkit provides underwriting guidelines, techniques to mitigate risks, pricing guides, credit union examples, and a loan portfolio management guide. Prudent pricing for non-prime auto loans can boost a credit union’s bottom line and simultaneously fulfill a social and economic need; that is, provide consumers with the economic mobility that comes with the mobility of affordable, reliable wheels.