Increased volume, new consulting program, expansion highlight a year of growth for GrooveCar’s CU Xpress Lease
Popularity for the credit union lease program soared in 2016 with new features to capture more loan volume
HAUPPAUGE, NY (January 27, 2017) — CU Xpress Lease, the nation’s leading auto lease program for credit unions, experienced its best year funding nearly a $1 billion in lease volume. The popularity of CU Xpress Lease soared, while at the same time, the program celebrated its 10-year anniversary in 2016. “Growth was impacted by market conditions in many regions of the country conducive to leasing. Credit unions also recognized the value the program provides. Member preferences, especially millennials, moved towards leasing over traditional financing for reasons such as lower monthly payments, getting more for their money and getting into a new vehicle every three years. Credit unions, in turn, found they needed to be competitive in all facets of auto financing, not just settling for a smaller percentage. All of this made an impression on our growth in 2016,” explains Frank Rinaudo, Senior Vice President of CU Xpress Lease.
Leasing works incredibly for credit unions in urban areas where mileage allowances can be met and where checking off all the other preference boxes leasing offers, over traditional financing, is realized. Nationally, leasing accounts for a third of all new cars financed. In select regions of the U.S. this number doubles. Areas such as New York, Southern California, New Jersey and South Florida dealerships are reporting leasing accounts for 70 percent of the autos financed. On Long Island, where 90% of the 300 franchised dealerships are on the CU Xpress Lease program, representatives reported the same findings. In 2016, CU Xpress Lease expanded into California, increased its penetration into New Jersey and the surrounding metro region of New York City, while developing a larger presence in the Philadelphia market.
However, the appeal of providing a lease program may have some credit unions leery of preconceived risks. Robert O’Hara, Vice President of Strategic Alliances for CU Xpress Lease, finds this doesn’t need to be the case “because it represents an area of growth for credit unions, making sure the credit union can focus completely on what they do best, while letting us run the program, is the goal. Credit unions understand credit risk and servicing loans; this is what they are responsible for during a lease. We understand the lease market and remarketing, which includes setting residual values, the lease return process while maximizing each vehicle’s resale value at lease maturity. Why would a credit union want to take on the residual value risk when they have little experience in this area?” CU Xpress Lease is the only credit union lease program to guarantee the residual value at lease maturity. This value proposition coupled with the program’s resources to build and maintain dealership bases, are some the reasons it has remained a favorite program for credit unions.
It is understandable, according to O’Hara, for credit unions to be skeptical. “Many credit unions were hurt with leasing programs that put all the risk back onto the credit union; this is not the case with CU Xpress Lease. Our program assumes the residual risk; we take ownership of the residual, the wear and tear, excess mileage, termination fees and other fees. In the 10 years the business has been operating and having gone through many lease cycles with credit unions, everyone on the program has been paid whole, 100 percent.” For example, with used vehicle values declining over the past year, it is imperative for a lease program to have forecasted this into the portfolio at lease origination. “We projected years ago that used values would come down based on the significant amount of new lease originations with 36 month terms. This surplus of used vehicles to enter the market would have a direct impact on their future value, therefore we were both cautious and conservative when determining residuals, especially because we are responsible for making the credit union whole. Long story short, before you enter the lease market you need to understand the residual risk, how is it managed and who bears the expense if there is a loss.”
In 2016 sales representatives and support staff were added to assist credit unions in managing every aspect of the program. Sales reps are responsible for building and managing the dealerships for each credit union, a built-in service that relieves the pressure of full-time management by the credit union. As financing options continue to transform to meet the financial goals of the member, CU Xpress Lease will be with its credit unions every step of the way to provide the tools in this ever-changing industry.
About GrooveCar
GrooveCar, a Fusion AF company, has been providing full-service automotive loan growth solutions to credit unions since 1999. GrooveCar focuses on building strong, lasting relationships with credit union partners by ensuring they can capture loan volume without compromising the quality and integrity of their portfolio. GrooveCar’s knowledge of the credit union industry, combined with an expansive dealer network surpassing 4 million vehicles, enhances the ability of credit union partners to secure loans and leases while offering the guidance and knowledge that their members seek.Additional information on GrooveCar can be found at http://www.groovecarinc.com.
About CU Xpress Lease
A lease product specifically designed for the credit union to reap the benefits of leasing while maintaining control of the credit process, CU Xpress Lease and its affiliated companies bring decades of experience in auto remarketing and lease servicing to meet the needs of credit unions and their members. With offices in Bedford, Texas; Lebanon, NJ and Hauppauge, New York, an experienced infrastructure is ready to provide credit unions with an innovative product without the risk.
