BECU Automates Decisioning to Offset Origination Decline

With volume slipping and interest rates on the rise, Boeing Employees Credit Union has worked to manage loan pricing and strengthen underwriting guidelines this year, Randy Schultz, the credit union’s senior product strategy manager for consumer loans, told AFN via email.

For instance, BECU is in the process of implementing a customized scoring system to fully automate decisioning, which will reduce internal needs to evaluate applications and speed decisioning, he said. Also, the credit union has reduced the percentage of 72-to84-month loans in its portfolio.

Overall, Tukwila, Wash.-based BECU expects to close out the year with $1.2 billion of auto loan originations, a 10% year-over-year decline. As consumers lean toward used vehicles, average loan amounts have shrunk to $22,641 from $24,363.

“The desire for newer used vehicles remains, and we continue to fund many ‘new to you’ vehicles,” Schultz said. “As expected, loan amounts are smaller and do take more operational time to process, but we find this to be a core segment in creating long-lasting relationships with our members.”

Schultz anticipates that demand for new and used cars will further decline in 2019. Meanwhile, BECU will continue to offer its Reprice Program, which automatically lowers members’ auto loan interest rates once a year if their credit score improves. “In 2018 alone, we expect the Reprice Program to return over $2.7 million to members by way of lowered interest rates,” Schultz said.

“What makes this program unique is that we do not punish a member with a higher rate should their credit deteriorate. This is effective as a means to both attracting new loans, while also rewarding members for positive credit-related behavior.” BECU was the nation’s 54th-largest auto lender by portfolio size at yearend 2017, according to Big Wheels Auto Finance Data.