One of the initiatives in Directions Credit Union’s 2006 strategic plan was to find ways to attract younger members to the credit union, specifically the Gen Y segment. After researching a variety of sources, we concluded that a first-time car buyer product was arguably the best way for us to attract younger members.

Who doesn’t remember their first car? The institution that finances a first auto purchase and makes it a positive experience has an excellent chance of developing a lifelong relationship with that younger consumer.

Our first-time car buyer program is tailored to attract the younger borrower who has little or no credit, short job time, and minimum income—in other words, those borrowers who would not qualify at all, using industry standard underwriting, or, at best, would only qualify with the help of a co-signer. We wanted our product to make it possible for younger borrowers to obtain their auto financing in their own names. The logic was that this would create a more loyal member.

We designed our underwriting criteria carefully, taking into account the possible characteristics of a first-time car buyer, while at the same time mitigating the risk associated with this type of lending as best as possible.

continue reading »