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As Troubled Lenders Head for the Sidelines, Credit Unions are Leveraging New Strategies for Growing Market Share and Managing Portfolio Risk
ALAMO, Calif. and LOS ANGELES (October 14, 2008) – A new partnership announced today will make it easier for credit unions to increase the size and scope of their auto lending business and more effectively and efficiently manage portfolio risk.
An agreement between Global Debt Network Automotive (www.gdnauto.com) and CU Lending Solutions, LLC, (www.culendingsolutions.com) opens the door for credit unions to expand their auto loan business into fast-growing non-prime segments and extend their reach and income stream beyond their local geography by selling and buying seasoned auto loan portfolios.
More than 40 million used cars are sold in the U.S. each year, with some 8 million of them to low- and moderate-income car-buyers, according to the Consumer Task Force for Automotive Issues. That number is expected to increase dramatically as a struggling economy and higher gas prices drive car-buyers to purchase less expensive, more fuel-efficient used cars.
As the new-car lending market declines, credit unions increasingly are seeking ways to serve this fast-growing segment of car-buyers. A recent study by the National Credit Union Foundation affirms that, “Non-prime auto lending represents a substantial nearby opportunity for not-for-profit credit unions to expand their markets, build net income, and attract new loyal members by giving them a substantially better deal.”
“As more Americans seek out used vehicles, dealerships need new financing partners to help them serve a much larger universe of customers and offer a far more diverse set of loan products than they have in the past,” said Mike Sheridan, founder and president of GDNAuto, the first nationwide online loan portfolio transaction platform. “At the same time, credit unions and finance companies are discovering there are ways they can serve this population and do so quite efficiently and profitably by selling their seasoned loans or balancing their risk by purchasing loans from other geographies. Global Debt Network a convenient online marketplace where dealerships and lenders and investors can turn to help meet their business goals.”
CU Lending Solutions works with credit unions and finance companies custom-develop, build and operate auto lending businesses that deliver sustained value.
“Increasingly, credit unions are more comfortable reaching out to serve this population of borrowers because they have access to an array of tools, services and resources that help them connect with new dealerships and better manage the financial and operational risk associated with indirect, non-prime loan portfolios,” said Frank Mercer, president and CEO of CU Lending Solutions LLC. “This partnership extends the market reach of both companies and provides auto dealers and lenders with an efficient way to originate more loans and convert the seasoned loans they have originated into cash to fund their operations.”
Developed and tested in collaboration with automobile dealers, dealer associations and portfolio buyers, GDNAuto uses an innovative dashboard-style control panel that enables loan originators to list and price the seasoned loans they want to sell to pre-screened banks, credit unions and other investors. Using GDNAuto, dealers can take control of their seasoned portfolio sales by setting their preferred terms, selecting the buyer with the purchase terms that match a dealer’s needs, and monitoring the status of the entire process – instantly. GDNAuto even helps dealers manage the due diligence paperwork and facilitates closing and funding – all within a confidential, secure environment.
Banks, credit unions, hedge funds and other pre-qualified investors use their own secure GDNAuto filtering tool to specify the types of loans they want to buy. Investors can review dealership portfolios, select the loans they want and submit a bid for consideration. Once approved, GDNAuto expedites the due diligence process and tracks every aspect of closing and funding to ensure a seamless transaction. Since GDNAuto was launched in June 2008, more than 90 buyer and seller members have registered and more than $60 million in auto loans have been listed.
About Global Debt Network, Inc.
Based in California with offices in Alamo, Calif. and Los Angeles, Global Debt Network, Inc. is a privately held company that simplifies auto finance by offering GDNAuto, the first nationwide online loan portfolio marketplace where automobile dealers, banks, credit unions, hedge funds and other financial institutions can come together to securely evaluate, price, sell and purchase asset-backed debt.
About CU Lending Solutions, LLC
CU Lending Solutions is a premier lending strategy and operations firm that helps credit unions and finance companies develop, build and operate strong auto lending businesses that deliver sustained value. The privately held company is based in San Diego and has offices in Tampa, Fla.