Increased Volume, New Consulting Program, Expansion ... Highlight a Year of Growth for GrooveCar's CU Xpress Lease
Popularity for the credit union lease program soared in 2016 with new features to capture more loan volume.
Leasing works incredibly for credit unions in urban areas where mileage allowances can be met and where checking off all the other preference boxes leasing offers, over traditional financing, is realized. Nationally, leasing accounts for a third of all new cars financed. In select regions of the U.S. this number doubles. Areas such as New York, Southern California, New Jersey and South Florida dealerships are reporting leasing accounts for 70 percent of the autos financed. On Long Island, where 90% of the 300 franchised dealerships are on the CU Xpress Lease program, representatives reported the same findings. In 2016, CU Xpress Lease expanded into California, increased its penetration into New Jersey and the surrounding metro region of New York City, while developing a larger presence in the Philadelphia market.
However, the appeal of providing a lease program may have some credit unions leery of preconceived risks. Robert O'Hara, Vice President of Strategic Alliances for CU Xpress Lease, finds this doesn't need to be the case "because it represents an area of growth for credit unions, making sure the credit union can focus completely on what they do best, while letting us run the program, is the goal. Credit unions understand credit risk and servicing loans; this is what they are responsible for during a lease. We understand the lease market and remarketing, which includes setting residual values, the lease return process while maximizing each vehicle's resale value at lease maturity. Why would a credit union want to take on the residual value risk when they have little experience in this area?" CU Xpress Lease is the only credit union lease program to guarantee the residual value at lease maturity. This value proposition coupled with the program's resources to build and maintain dealership bases, are some the reasons it has remained a favorite program for credit unions.
It is understandable, according to O'Hara, for credit unions to be skeptical. "Many credit unions were hurt with leasing programs that put all the risk back onto the credit union; this is not the case with CU Xpress Lease. Our program assumes the residual risk; we take ownership of the residual, the wear and tear, excess mileage, termination fees and other fees. In the 10 years the business has been operating and having gone through many lease cycles with credit unions, everyone on the program has been paid whole, 100 percent." For example, with used vehicle values declining over the past year, it is imperative for a lease program to have forecasted this into the portfolio at lease origination. "We projected years ago that used values would come down based on the significant amount of new lease originations with 36 month terms. This surplus of used vehicles to enter the market would have a direct impact on their future value, therefore we were both cautious and conservative when determining residuals, especially because we are responsible for making the credit union whole. Long story short, before you enter the lease market you need to understand the residual risk, how is it managed and who bears the expense if there is a loss."
In 2016 sales representatives and support staff were added to assist credit unions in managing every aspect of the program. Sales reps are responsible for building and managing the dealerships for each credit union, a built-in service that relieves the pressure of full-time management by the credit union. As financing options continue to transform to meet the financial goals of the member, CU Xpress Lease will be with its credit unions every step of the way to provide the tools in this ever-changing industry.
About CU Xpress Lease:
A lease product specifically designed for the credit union to reap the benefits of leasing while maintaining control of the credit process, CU Xpress Lease and its affiliated companies bring decades of experience in auto remarketing and lease servicing to meet the needs of credit unions and their members. With offices in Bedford, Texas; Lebanon, NJ and Hauppauge, New York, an experienced infrastructure is ready to provide credit unions with an innovative product without the risk.
Founded in 1999, GrooveCar provides automotive loan growth solutions to credit unions nationwide while providing their members, as well as the general public, with the most informative and user-friendly auto search engine. With its expansive dealership network surpassing five million vehicles, GrooveCar facilitates the entire car buying process, including shopping, researching, buying, leasing, and financing. Through the national auto-leasing program CU Xpress Lease, credit unions can take advantage of leasing opportunities in the new and pre-owned vehicle market. CU Xpress is the leading credit union lease program in the nation. Additional information on GrooveCar or CU Xpress Lease may be found at http://www.groovecarinc.com.
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