Higher Dealer Expectations May Slow Loan Growth in 2014, CU Exec Says

Through October, Mountain America Credit Union grew its auto lending business 25% year over year, and the CU expects as much as 10% growth in auto finance in the coming year.

“I think the economy has improved enough, that the purchase market has come back, and I expect that would continue into next year,” said Jade Beckman, vice president of lending at Mountain America Credit Union.

Formed in 1934 as the Salt Lake Telephone Employees Credit Union, Mountain America recently grew its footprint when it opened two new branches ― one in Las Vegas this month, and one in Idaho in October. Part of that growth plan has been fueled by auto, Beckman said.

The West Jordan, Utah-based financial institution also has branches in its home state, plus Arizona and New Mexico.

Though Mountain America has avoided jumping into the hot subprime sandbox, it has still felt the heat of increased competition in the auto lending market. Lenders have gotten more aggressive when it comes to rates, and dealer expectations about compensation have increased, he said. To adjust, Mountain America has taken a more middle-ground approach to both. “We’ve had to increase, just a little bit, on the dealer compensation side and, we’ve had to cut our rates just a bit,” he said.

Beckman noted that control of the auto finance market is a pendulum that swings back and forth between dealer and lender. Right now, the F&I office has more control than it did two or three years ago. “Dealers have higher expectations on what can get bought, what the rate should be and what their compensation should be,” he said.

Nonetheless, much of the CU’s core dealer base is the product of longstanding relationships, which means they aren’t going anywhere. “There’s a lot of trust that’s been built up over the years, and those (dealer-lender) relationships haven’t really changed,” he said.