GrooveCar reported lease volume originated through its CU Xpress Lease program is up 40% year over year in June, from the same time last year, thanks to the growing popularity of leasing among younger demographics, said Robert O’Hara, the company’s vice president of strategic services.
Hauppauge, N.Y.-based GrooveCar, a credit union financial solutions provider, is on pace to close $1 billion in leases this year through its credit union partners, up from about $650 million last year, O’Hara said.
Basking Ridge, N.J.-based Affinity Federal Credit Union, one of GrooveCar’s credit unions using the program, reported its lease originations were at the highest volume the lender has seen, said Theresa Williams-Barrett, vice president of consumer lending and loan administration at AFCU. The credit union first partnered with GrooveCar in April 2015 to kick off its lease offerings. AFCU originated about $21 million in auto leases in July, Williams-Barrett added.
The CU Xpress Lease program pairs auto lenders with dealers to offer their consumers competitive leasing options, O’Hara said. GrooveCar signs on dealers to its program, manages the dealer relationship, and educates credit unions about what they need to price the leases at, to be competitive in the market, O’Hara explained.
“Leasing is becoming more popular,” especially among the younger demographic, he said. “Millennials are looking for newer cars, especially if they are just graduating college or are looking to get new car with all that newer technology,” he added.
Typically, technology has a three-year lifecycle, meaning that if a consumer has car that is more than three years old, that car may have dated technology features, he said. Consumers are embracing leases for the lower monthly payments on newer cars — something that can be out of reach with a traditional loan.
The CU Xpress Lease program is offered in six states and has 13 credit unions and 800 dealers enrolled to use the program. GrooveCar anticipates signing on 40 additional credit unions within the next two months.
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