DALLAS-Neighborhood Credit Union here has begun offering vehicle return protection as an enhancement to its suite of auto lending products.
"From a competitive standpoint here in Dallas, everyone was offering attractive pricing, and as you know, you can only go so low with pricing," explained Carolyn Jordan, SVP of retail services and development. "Low interest rates are not sustainable. We were looking for a way to differentiate in the market and have something that would be a value add for the member, and that would be attractive and not just be based on price."
The package-a suite of products from MPower-includes extended warranty service, paint and dent repair, and tire and wheel protection, in addition to vehicle return coverage.
The package is included free for up to six months on any Neighborhood auto loan. "If they qualify for the loan and (the car) meets the mileage requirements, they get it," said Jordan. The first six months of vehicle return coverage is free, after which that service (and the other three components of the MPower suite) are available at varying levels of coverage.
"We give them the entire suite and they have it for three to six months, so they get everything and they can experience it," explained Jordan. "They have the whole plan and nothing is limited during that period, and then they can choose to purchase one or all of the various programs."
The 31,000-member, $313-million CU began offering the MPower package in November 2011, and an average of 123 loans qualify per month for the upgrades. The services are only available on direct loans, and according to Mike Roark, SVP of lending and collections, about half of the members who take out car loans with the CU opt-in for some upgrade beyond the complementary period.
Limits of Program
According to its most recent NCUA Call Report, Neighborhood CU has 6,134 loans on its books totaling $88.7 million, with the bulk of that business coming in the used auto realm.
The highest level of coverage offers $15,000 in negative equity for 84 months, covering the gap between the car's value and the amount the dealer will give the borrower upon return of the vehicle.
The credit union is promoting the offer during the sales process, but also has information on its website to entice potential purchasers, as well as e-mail blasts.
Neighborhood CU declined to provide Credit Union Journal with specific pricing for the packages once the complementary period ends, but Jordan called it "a nominal fee." The services can be built into the cost of the loan. The package is not available on vehicles with more than 36,000 miles.
Among the features of the vehicle return component are temporary job loss protection, which allows the member to keep the car for up to six months (depending on the level of coverage) "just in case you're able to get back to work," said Roark. "But if you're not, they'll make the payments for six months and then you can do the return."
Jordan told Credit Union Journal that no specific conditions led NCU to offer the service; instead, "it was something in this particular environment people could use."
Subscribers can read previous coverage and related stories by going to www.cujournal.com and entering the following headlines into the website's archive search function:
Neighborhood CU Awards Another $10,000 Savings Prize - Aug. 29
Neighborhood CU Awards $25,000 Savings Prize - Jan. 5
Neighborhood CU Implements Imprivata's Sign-On Management - April 15, 2011
For more info on Neighborhood CU, go to www.mynycu.com