Soaring new car loans at SECU!
The SECU Board of Directors decided to introduce risk-based lending at SECU in March, 2023. Risk-based lending (RBL), as you will recall, uses credit scores to predict the probability of default of a member loan based on a secret, "hush-hush" algorithm of data.
Using the past to predict the future is an exceedingly suspect idea. If using past performance data to predict the future was a valid concept, then certainly we should use it in more important ways, like predicting national elections, the stock market, or the weather!
Regardless, the SECU Board knew what was best for the membership; and even chose to ignore the adverse discrimination - particularly for AfAms, young folks and females - which unfortunately accompanies RBL. After all, most banks and credit unions use the RBL approach, so why not charge those "guilty until proven innocent" borrowers a bit more?
But equally important, the SECU Board also bought into (hook, line and stinker) the senior staff assertion that RBL would bring back in droves SECU "A-members" who were financing their new cars elsewhere.
So let's take a look at the record after a little over a year of RBL at SECU. As background, there were 447,919 new vehicles sold in 2023 in North Carolina and 2024 looks to be another good year too! The "average" car price was @$47,000 so that's @$21 billion in new car sales in 2023 alone plus an apparently similar amount in 2024!
✅ Here's what the SECU new car lending portfolio record looks like now (as reported to the feds):
September, 2023: 🔆 #of new car loans: 39,007 🔆 $ amount of new car loans: $1.065 billion
September, 2024: 🔆 #of new car loans: 40,891 🔆 $ amount of new car loans: $1.138 billion
Portfolio gain of: # gain: +1,884 loans $ amt: +$73 million
A net gain of less than 2,000 loans and less than $75 million out of @600,000+ new vehicles sold for @ $25+ billion.
... impressive results, to say the least!
