Change is not always easy, particularly for busy credit unions that are laser-focused on meeting their members’ daily needs. As an organization dedicated to meeting the changing financial needs of its membership, $518 million Heritage Federal Credit Union, Newburgh, Ind., understands that to better serve a broader membership base, change is sometimes necessary.
Guaranteed Asset Protection is not a unique offering. Lenders know that GAP offers borrowers a level of auto loan protection while generating non-interest income for the CU; most borrowers know that GAP can help “fill the gap” between their loan balance and insurance payout in the event of a theft or total loss. However, in a competitive auto loan market, more and more lenders are thinking outside the box to find creative ways to generate non-interest income.
In other industry news, we have seen a dramatic shift in consumer borrowing behavior that puts consumers and members at an increased risk for GAP exposure, making sufficient vehicle protection coverage even more critical to auto loan borrowers. Back in 2010, borrowers had a maximum GAP exposure of around $1,800 based on the average vehicle loan value and loan term. However, in 2016, average loan terms have increased by nearly $5,000, giving borrowers a maximum GAP exposure of more than $5,000 that lasts 30 months.continue reading »