CUNA News
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • Topics
    • Community Service
    • Compliance
    • Credit Union Hero
    • Credit Union Rock Star
    • Credit Union System
    • Directors
    • Human Resources
    • Leadership
    • Lending
    • Marketing
    • Operations
    • Policy & Issues
    • Sales & Service
    • Technology
  • Credit Union Magazine
    • Buyers' Guide
    • COVID-19
    • Digital Edition
    • Credit Union Hero
    • Credit Union Rock Star
    • Subscribe
    • Advertise
    • Contact
  • Advertise
  • Awards
    • Nominate Credit Union Hero
    • Nominate Credit Union Rock Star
  • Podcasts
  • Videos
  • Jobs
  • Contact

News

Home » Understand your indirect lending costs
CU System Lending
#CFOCouncil

Understand your indirect lending costs

Margins tend to be thinner on indirect loans compared with direct loans.

May 23, 2017
Ron Jooss
No Comments
Jason Scott

Outside of the finance department, people often express the need for the chief financial officer's (CFO) buy-in on new initiatives.

But CFOs need buy-in as well on initatives to minimize costs and increase profitability.

This is an important aspect of indirect lending, says Jason Scott, vice president, performance and planning analytics, for Security Service Federal Credit Union in San Antonio. He addressed a breakout session Monday at the 2017 CFO Council Conference in Orlando.

It’s imperative that the CFO, chief lending officer, and chief operating officer understand the profitability and costs associated with indirect lending, he says.

“The CFO really understands that profitability component,” Scott says. “He or she is going to understand where to raise rates, especially in the B and C credit tiers where there’s more margin. The chief lending officer [CLO] is going to be more worried about creating volume. It’s a give and take between the CLO and the CFO. They have to work together.”

Scott says lenders must buy in to the originating and servicing costs associated with indirect lending because margins are thinner than with direct lending.

“If I can’t get the CLO and the COO to understand the analytics, it’s really hard to manage your relationships with dealers,” Scott says.

He adds it’s also important for CFOs to look at the rate sheets from other financial institutions that do indirect lending, especially big banks.

“Wells Fargo has huge teams that work on these analytics,” Scott says. “Once you start looking at the rates sheets you’ll understand that some financial institutions understand what they’re doing better than others.”

►Click here for more conference coverage from CUNA News, and get live updates on Twitter via @AdamMertzCUNA, @cumagazine, and  @CUNACouncils, and by using the #CFOCouncil hashtag. Learn more about the CUNA CFO Council, a member-led professional society for credit union executives, at cunacouncils.org.

KEYWORDS finance

Post a comment to this article

Report Abusive Comment

Credit Union Magazine: Winter 2022

Winter 2022

Credit Union Magazine’s Winter 2022 issue highlights data-driven marketing, the board’s role in cybersecurity, elder abuse scams, credit unions’ auto lending advantage, and more.
Digital Edition •  Subscribe

Trending

  • Reps introduce bipartisan Credit Union Board Modernization Act

  • Compliance: Experts analyze NCUA’s 2023 supervisory priorities

  • CFPB must convene SBREFA panel for credit card fee rulemaking

Tweets by CUNA_News

Polls

How do you feel about the economy in 2023?

View Results
More

Champion for the Credit Union Movement

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.

More CUNA

  • Membership
  • Contact Us
  • Careers

Resources for

  • Credit Union Advocates
  • Leagues
  • Press
  • Providers

Our Affiliates

  • American Association of Credit Union Leagues (AACUL)
  • Credit Union Awareness
  • Credit Union House
  • CUNA Strategic Services
  • National Credit Union Foundation
GET CUNA UPDATES
© 2023 Credit Union National Association | ADA Compliance Notice & Legal
Email Us