Credit letter repair write

Are you informing members or just trying to write loans?

MANAGEMENT

LENDING LETTER

Put yourself in your members' shoes for just a moment and imagine yourself going through these experiences:

* When visiting your credit union to finance a loan, a loan officer notices you're planning to pay $2,000 more than the manufacturer's suggested retail price on your car, but the loan officer doesn't say anything. Does it bother you that you weren't asked why you were paying so much? Is there any reason for you to be disappointed in your credit union?

*You recently financed your car at a dealership and find out you'll pay $1,800 more in financing over the life of the loan than you would have by financing at your credit union. The dealership said the loan was cheaper, but it wasn't. Your credit union could refinance the loan and save you the $1,800, but no one at the credit union tells you about the better deal. Is there any reason for you to be disappointed in your credit union?

* You buy a used car with a poor safety record and an extensive repair record. Your credit union has access to that information, but no one tells you. Does that influence how you feel about your credit union?

In my view, these three questions get to the crux of an ethical dilemma some credit unions are facing and sometimes failing: Is it really a credit union's job to counsel its members about every part of the car buying and financing process? Or is it the credit union's job to simply offer loans and let members worry about researching the vehicle's history and negotiating the best price?

For many credit unions, the failure here is one of degree, not intent. I've run into only a few credit unions that don't make some attempt to educate and protect their members. But some important players in the credit union movement believe that credit unions have no business advising members about negotiating tactics or telling members they're paying too much.

Where does your credit union stand on this issue? To help you decide, try to figure out how your credit union would respond in this situation:

One of your members comes to your credit union with dealership paperwork showing the dealer is trying to charge your member $2,000 more than the manufacturer's suggested retail price for an unpopular vehicle. You've seen dozens of these vehicles sold for $2,000 less than the retail price. You also notice the member was given less than "rough" book value on the member's very clean, low-mileage trade-in.

How does your credit union respond in this type of situation? Have your member service representatives been trained to show members the book value on their trade-ins? Do they tell members what others have been paying? Or do they finance loans without comment if the member's credit can support it? Do your member service representatives play the role of counselors or are they silent partners by default with car dealers?

You can, of course, dismiss all of these arguments by simply saying, "Hey, car dealers are our partners and we have a fine relationship with them." But I think at some point you'll be disappointed because car dealers and credit unions have fundamentally different agendas. The dealer's agenda (and it's not necessarily a bad one) is to maximize dealership profit on every customer. Dealers are in the "opportunity " profit business. They make more profit on uninformed customers than on informed customers. Credit unions don't operate on the "opportunity" profit mentality.

Just where does your credit union stand on this issue? If you stand on the side of informing your members, how can you make that policy more effective?

Standing with your members will require some courage on your part and on your board's part. The car dealers in your community generally don't like true counseling and member education from anyone, much less credit unions. And they certainly don't like you taking their loans. .

Remar Sutton | Sutton &Waite

Contact Remar Sutton at 404-229-5094 or autoissues@aol.com.