Over the past several months, we have made the case for vehicle service contracts for credit unions from just about every angle. We have looked at the strategic role they play in portfolio stability. We walked through the ROI and the non-interest income most programs leave on the table. We have shown how rising repair costs, longer loan terms, and tariff pressure are reshaping the risk in your auto portfolio.

All of that is true. But none of it lands the way a real story does.

Behind every claim is a member who hit a wall. A repair bill they did not see coming, on a vehicle they still owe on, at a moment when their budget had no room for it. What happens next depends almost entirely on whether they had coverage.

Here are a few of those moments, drawn from real claims. The numbers are real. The outcomes are real. And the difference a VSC made is the whole point.

When the Coverage Caught What No One Saw Coming

A member financed a 2021 Toyota Tundra SR5 with 65,081 miles on the odometer. The loan amount was $44,931. The factory warranty was expired, and without coverage, she would be financing a vehicle with no mechanical protection at all. After her loan officer walked through the financial risk of unexpected repairs, she decided to include the CU Certified Comprehensive 48-month/48,000-mile plan in her loan.

Just over four months later, her check engine light came on. During diagnostics, the shop discovered something that had nothing to do with how she drove the vehicle: the previous owner’s catalytic converters had been stolen, and an insurance claim had replaced them with aftermarket parts. Those parts were now failing.

Most vehicle service contracts exclude exhaust system components like catalytic converters. CU Certified’s Comprehensive plan does not. Both catalytic converters were replaced with OEM parts, meaning direct replacements for the vehicle’s original components. The total claim paid was $7,020.53.

Four months into a loan with no equity built, this member paid $0 out of pocket and drove away in a vehicle performing better than the day she bought it. The loan never skipped a beat, and neither did the relationship.

When a Reliable Vehicle Finally Let Them Down

A recently retired couple purchased a 2020 Honda Pilot with 26,605 miles for $41,500. They planned to share the vehicle, and with retirement came a closer eye on expenses. When their loan officer brought up CU Certified, they pushed back. This was a Honda, one of the most dependable vehicles on the road. Did they really need it?

After a thorough conversation, they decided to add the coverage, just in case. For two years, that decision sat quietly in the background. The Honda lived up to its reputation. Then, approaching the three-year mark, things changed.

A thumping vibration started from the front of the vehicle. The driver’s seat stopped cycling between Driver 1 and Driver 2 settings, locking into his wife’s position, which meant her husband physically could not drive the car. Then the AC started blowing hot air. Three separate issues, none minor, none cheap.

They dropped the vehicle off at the shop (only she could drive it) and waited. When the call came, they expected a large bill. Instead, the shop told them the AC compressor, high-pressure fuel pump, and seat frame had all been replaced. CU Certified had worked directly with the shop to approve and coordinate the repairs. Total claim: $7,149.73. Member out-of-pocket: $0.

On their way home, they stopped by the credit union to thank the loan officer who had encouraged them to get the coverage. For a retired couple watching every dollar, a $7,000+ repair that cost them nothing was not just a financial relief. It was proof that the relationship with their credit union had their back.

When Coverage Paid. And Paid Again. And Again.

In February 2023, a member added a CU Certified Comprehensive plan to her loan on a 2019 Dodge Challenger with only 18,699 miles on the odometer. Low mileage, but the factory warranty was expired due to the vehicle’s age. Her loan officer made that clear: without coverage, any repair that came up was entirely her responsibility. She added the plan.

Less than two months later, the Challenger was in the shop with a failure in a critical component of the emissions system. CU Certified paid the $786.67 repairs. She paid $0.

In December 2024, with only 41,473 miles on the car, the engine failed. CU Certified covered both the engine and starter replacement. Total claim: $6,715.30. Out of pocket: $0. And because her plan includes rental car benefits, she also had five days of transportation covered while the vehicle was in the shop.

Three years into the loan, the alternator went. CU Certified paid $1,051.26. Then, just over eight months later, the AC compressor failed, which in Texas is not optional. The plan covered the repair and the tow to the facility. Total claim: $1,447.56.

To date, this member has received over $10,000 in total benefit from her CU Certified contract. She still has coverage through February 2029 or until the odometer reaches 100,000 miles, whichever comes first.

That is the part that does not show up on a balance sheet. A member who is protected at her worst moments does not forget which institution had her back.

What These Stories Have in Common

None of these members understood the mechanics of their coverage when they signed up. They did not need to. They needed to know that when something broke, they would not be choosing between fixing their car and paying their loan. That is exactly what a well-structured credit union VSC program delivers.

That is exactly what a well-structured VSC delivers. Look at what these claims have in common:

• A repair large enough to destabilize a household budget
• A vehicle still carrying a loan balance
• A member who, without coverage, was a real candidate for delinquency, deferred maintenance, or surrender
• A claims process that paid out cleanly and kept the member on the road

Multiply that across a portfolio and the pattern is clear. Every one of these stories is a delinquency that did not happen, a piece of collateral that held its value, and a member relationship that got stronger instead of strained.

This is the difference between treating a VSC as an add-on and treating it as portfolio protection. The stories are not the exception. With the right program, they are the design.

The Stories Are Better When the Program Is Built Right

Not every VSC program produces outcomes like these. Coverage that excludes the repairs members actually face, deductibles that create friction at the worst moment, or a slow claims process can turn a protection product into a frustration.

The programs that generate stories like these share a structure: meaningful coverage across newer, older, and high-mileage vehicles, true low or $0 deductibles, a straightforward claims experience, and a model that returns value to the credit union instead of a third-party administrator. In a credit union-centric program like CU Certified, 100% of underwriting profit returns to the institution, so the same coverage that protects your members also strengthens your bottom line.

Your members will have these moments. The only question is whether your program turns them into stories worth telling.

See what a credit union-centric VSC program could mean for your members and your portfolio. Reach out to FocusOne today to request a free program analysis and Non-Interest Income Financial Proforma.

Reach out or connect with us on LinkedIn.

For decades, credit scores have been the primary lens through which lenders evaluate risk. That model worked reasonably well when borrower profiles were relatively uniform. But the next generation of auto buyers does not fit the traditional mold, and credit unions that rely solely on conventional scoring are leaving a significant and creditworthy population underserved.

Millennials and Gen Z borrowers are entering the auto finance market with thin credit files, not because they are financial risks, but because their financial journeys look different. Student loan debt, delayed homeownership, and a preference for debit over credit have produced a generation of consumers who demonstrate strong financial habits in ways that traditional scoring models were never designed to capture.

AI-powered underwriting changes that equation, and for credit unions competing in the indirect channel, it is quickly becoming a competitive necessity.

The Thin-File Borrower Problem Is a Credit Union Growth Problem

A thin credit file is not the same as a bad credit history. It simply means there is not enough traditional data for a conventional scoring model to render a confident decision. For many next-gen borrowers, that results in automatic declines or conservative approvals that do not reflect their actual creditworthiness.

The cost to the credit union is real. Every qualified borrower turned away at the dealership is a lost loan, a lost member relationship, and a signal to the dealer that your program has limits. In a market where captive lenders and fintechs are actively designing products for younger borrowers, credit unions that cannot say yes to thin-file applicants are ceding ground they may not recover.

Industry data supports the urgency. Millennials now represent nearly four in ten auto finance applications, and Gen Z’s share is growing. The volume is there. The question is whether your underwriting infrastructure can evaluate it accurately.

The volume is there, and the data backs it up. For a deeper look at how credit unions can scale their indirect programs to meet this demand without burning out their teams, download our Q2 white paper: Scaling Indirect Lending for the Next Generation →

How AI Underwriting Works Differently for Thin-File Applicants

Traditional credit scoring models evaluate a narrow set of variables, payment history, utilization, length of credit, account mix, and new inquiries. These are useful signals, but they are incomplete for borrowers who have not yet built extensive credit histories.

AI-powered underwriting models analyze a significantly broader range of data points, looking beyond the credit file to assess financial behavior, stability indicators, and risk patterns that conventional models miss. The result is a more complete picture of the borrower, one that allows credit unions to make confident lending decisions for applicants who would otherwise fall into a gray zone.

For credit unions, this translates directly into:

• Higher approval rates on qualified thin-file borrowers without increasing portfolio risk
• Faster decisions driven by automated analysis rather than manual review of edge cases
• More consistent decisioning across high application volumes
• Stronger dealer relationships built on a reputation for saying yes when they are warranted

It is worth being clear about what AI underwriting is not. It is not a tool for lowering credit standards or approving loans that should not be approved. It is a tool for evaluating risk more accurately, which benefits both the borrower and the credit union.

Reducing friction in the approval process is one of the highest-impact changes a credit union can make. Learn how in our Q1 white paper: Reducing Friction in Loan Approval Workflows →

Responsible GrowthReal-Time Portfolio Analytics: The Key to Responsible Indirect Lending Growth

Expanding approval rates through AI underwriting creates opportunity, but opportunity without visibility creates risk. That is where real-time portfolio analytics become essential.

FocusOne integrates Microsoft Power BI into our indirect lending platform to give credit union partners continuous visibility into portfolio performance. Rather than relying on lagging monthly reports, lending teams can monitor trends, track outcomes by dealer, segment, or approval tier, and identify early signals of risk before they become problems.

NCUA data shows that auto loan delinquency rates for federally insured credit unions reached decade-high levels in late 2024. For credit unions scaling their indirect programs to meet next-generation demand, that trend underscores the importance of pairing growth with real-time oversight.

AI decisioning and Power BI analytics work together to create a feedback loop, approvals informed by sophisticated risk modeling, outcomes tracked in real time, and strategies refined continuously based on what the data reveals.

AI Underwriting Is Practical for Credit Unions of Every Size

One of the most common hesitations credit unions express about AI-powered tools is the assumption that implementation is complex, expensive, or disruptive. The reality is that when the right partner manages the technology infrastructure, credit unions can access the benefits of AI underwriting without building or maintaining the systems themselves.

FocusOne handles that complexity on behalf of our credit union partners. Our platform integrates AI-powered underwriting and real-time analytics into the indirect lending workflow, so your team gets the decisioning speed and accuracy benefits without the operational overhead.

The result is a program that can evaluate more applicants, approve more qualified borrowers, and scale with growing demand, while maintaining the credit discipline and portfolio visibility your leadership team requires.

The Next Generation of Borrowers Deserves a Better Credit Evaluation

The shift toward AI underwriting is not just a technology upgrade. It is a philosophical one. It reflects a recognition that creditworthiness is more nuanced than a single number, and that the credit unions best positioned to serve the next generation are the ones willing to look beyond the score.

For credit unions invested in growing their indirect programs, reaching younger borrowers, and strengthening dealer relationships, AI-powered underwriting is one of the highest-leverage investments available right now.

If you are ready to explore how smarter underwriting technology can expand your indirect program’s reach without increasing risk, connect with Kurt Howard on LinkedIn or reach out to request an Indirect Program Review, email him at Khoward@focusone.com. 

If there’s one thing I’ve learned in this business, it’s this: waiting for the “perfect moment” rarely works out the way you think it will.

We’ve seen it before. Whether it’s regulatory uncertainty, shifting markets, or rising rates, there’s always a reason to pause. But as history has shown, stepping away or standing still often creates more risk than moving forward with the right strategy.

And today, that hesitation is showing up again, this time around mortgage rates.

When Will Mortgage Rates Drop Back to 5%?

It’s a fair question. But it may not be the right one.

Because today’s rate environment isn’t being held up by chance, it’s being supported by a set of fundamentals that aren’t changing overnight.

Why Mortgage Rates Aren’t Falling Quickly

Right now, the Federal Reserve is in a position where it doesn’t need to stimulate the economy.

• Inflation is still above target
• Employment remains strong
• The economy is holding steady

That combination doesn’t create urgency for lower rates.

In fact, it creates the opposite.

The Fed’s focus today is on **keeping inflation in check**, not reigniting growth. And that means being cautious about anything that could push borrowing costs lower too quickly.

Mortgage Rates Are About More Than the Fed

While the Federal Reserve plays a role, mortgage rates are influenced by a much broader ecosystem.

At a high level, they’re driven by:

• The 10-year Treasury yield
• The spread investors demand to hold mortgage-backed securities (MBS)

And that second piece, the MBS market, is where a major shift has taken place.

Just a few years ago, the Fed was one of the largest buyers of mortgage-backed securities. That demand helped keep mortgage rates artificially low.

Today, that support is largely gone.

The Fed is no longer actively buying MBS and is allowing those holdings to roll off its balance sheet. Mortgage rates are now being driven more by private investors, and those investors are demanding higher returns in today’s environment.

In other words, it’s not just where Treasury yields are, it’s whether investors want mortgages at all.

Understanding Today’s Mortgage Rate Floor

When you combine:

• A 10-year Treasury yield that remains elevated
• Wider mortgage spreads due to reduced demand and ongoing market uncertainty

You begin to see why rates have stayed elevated, and why, this week, they pushed higher still, with the 30-year fixed climbing back toward the high-6% range.

Could rates move lower? Absolutely.

But under current conditions, there’s a natural floor that’s difficult to break without a meaningful shift somewhere in the system.

What Would Actually Move Mortgage Rates Lower

For rates to move meaningfully lower, we would likely need to see a combination of changes across the broader economy.

That could include:

• A cooling labor market
• Inflation moving closer to the Fed’s target
• Or a broader economic slowdown

But it’s not always one single event that drives rates.

There are other forces at work beneath the surface:

• Improved investor demand for mortgage-backed securities, which could narrow spreads
• Shifts in global capital flows, increasing demand for U.S. bonds
• Changes in Treasury supply, which influence overall yields
• Evolving market expectations, especially around future Fed policy

Markets are forward-looking. Rates don’t always wait for the data, they move on where investors believe things are headed.

In other words, it’s not one lever. It’s a system.

What This Means for Credit Union Members

This is where the conversation matters most.

Because while many are waiting for rates to fall:

• Home prices may continue to adjust
• Inventory remains constrained in many markets
• Opportunities don’t stand still

We’ve seen time and again that trying to “time the market” can lead to missed opportunities, whether it’s in lending strategy or member decisions.

Bringing It Back to Mortgage Strategy

Much like navigating regulatory complexity or past market shifts, the key isn’t waiting for perfect clarity, it’s making informed decisions with the information you have.

Today’s rate environment is shaped by more than just Fed policy. It reflects inflation expectations, investor behavior, global demand, and structural shifts in how mortgages are priced. Right now, an April CPI print of 3.8%, the highest in nearly three years. Combined with geopolitical pressure on oil prices, is pushing the 10-year Treasury yield to one-year highs, and mortgage rates with it.

And when things get complex, that’s when experience and guidance matter most.

The Bottom Line

Trying to wait for the “perfect” rate is a lot like standing on the sidelines waiting for every traffic light to turn green before you start driving.

It sounds like a safe strategy, but in reality, you’ll never move.

Markets don’t work that way. There will always be a red light somewhere, rates, prices, inventory, or the broader economy.

The goal isn’t perfect conditions.

It’s making the best possible decision with the conditions in front of you.

Because in this business, standing still is rarely the safest place to be.

Why Credit Unions Need a Mortgage Partner in This Rate Environment

In a rate environment defined by volatility and tighter margins, execution matters just as much as strategy. Many credit unions know where they want to go, but operational constraints, staffing limitations, and inconsistent loan flow make it difficult to get there.

That’s where FocusOne Mortgage becomes a strategic advantage.

FocusOne provides a complete mortgage solution, from loan origination through processing, underwriting, closing, and servicing, giving credit unions immediate access to the people, processes, and technology needed to perform at a high level in any market. Instead of managing capacity challenges internally, you gain a scalable platform that adjusts with demand.

Just as important, the partnership delivers significant financial benefits. Rather than carrying the fixed costs of systems, staffing, and infrastructure, FocusOne enables a variable cost structure tied directly to loan production. That means you can scale efficiently, protect margins during slower periods, and fully capitalize on opportunities when volume returns, without overextending your organization.

With consistent execution, faster turn times, and a stronger member experience, FocusOne helps ensure you’re not just keeping up with the market; you’re positioned to compete in it.

Ready to talk through what today’s rate environment means for your mortgage program? Contact Keith Varney at kvarney@focusone.com or connect with him on LinkedIn.

Most credit unions lose auto loans before they even know a member is in the market. The issue is not rates or products. A strong credit union auto lending strategy starts with visibility, and right now, most credit unions don’t have it.

By the time a member submits a loan application, or walks into a dealership, they have often already made key decisions about what to buy and how to finance it. If your credit union is not part of that early shopping phase, you are competing too late.

The Visibility Gap Hurting Auto Loan Growth

When a member shops for a car on third-party platforms, you are invisible. There are no signals, no insights, and no opportunity to engage.

That changes when the shopping experience happens within your ecosystem.

With a branded Member Auto Center car shopping platform, your credit union can see:

• Which members are actively browsing vehicles
• What price ranges and vehicle types they are considering
• How close they are to making a purchase decision

“We now enter the conversation at the beginning of the buying cycle with the ability to preapprove and educate members during their search, helping us make loans we might otherwise have lost.”

— Michelle Oshinski, SVP/CMO, PrimeWay FCU

Credit unions’ share of total auto financing fell to 19.4% in Q4 2024 — the lowest level recorded in at least six years, even as members continued buying cars. [CU Times]

This is not just better data. It is earlier access to the moment that determines where the loan goes.

what early shopping data makes possible

Knowing a member is shopping before they apply changes how your lending team can operate.

Instead of reacting to applications, you can:

• Offer credit union pre-approvals before the member ever visits a dealership
• Deliver rate offers aligned to the exact vehicles they are considering
• Engage at the right moment, before dealer financing enters the conversation

Credit unions winning more auto loans today are not just competing on rates. They are showing up earlier, with relevant, timely outreach that positions them as the first and best financing option.

Your Existing Members Are the Biggest Opportunity

While new member acquisition gets attention, your current members are already in your ecosystem. They trust you. What is often missing is visibility into when they are ready to buy.

A branded auto shopping experience connected to your financing solves that problem in two ways:

1. It positions your credit union as the natural starting point for the car-buying journey

2. It provides real-time signals that tell you exactly when to engage

Instead of guessing who might be in the market, you know, and you can act on it immediately.

From Waiting for Applications to Managing a Pipeline

Shopping intelligence only creates value if your team is prepared to act on it.

This requires a shift:

• From waiting for applications → to engaging during the shopping phase
• From static lead lists → to a live pipeline of in-market members
• From generic outreach → to timely, personalized engagement

The most successful credit unions are not just using Member Auto Center as a tool. They are treating member shopping activity as a dynamic pipeline and managing it with the same urgency as funded loans.

That shift, from reactive to proactive, is where real auto loan growth happens.

See What Your Members Are Shopping for Right Now

Your members are already in the market. The question is whether you can see them, and reach them, before someone else does.

See what your members are shopping for right now and start engaging them earlier in the buying journey.

Request a Member Auto Center demo to see how FocusOne helps credit unions stay at the center of the auto lending conversation.

Connect with us on LinkedIn for more news.

Auto repair costs were already climbing before tariffs entered the conversation. Now they’re accelerating.

New and expanded tariffs on imported auto parts are pushing the cost of common repairs higher, and that pressure is landing directly on your members. A repair that was manageable two years ago may now carry a bill that competes with a car payment. For credit unions with auto loan portfolios, that’s not just a member problem. It’s a portfolio problem.

The good news? If your VSC program is structured correctly, you’re already ahead of it.

Parts Costs Are Up. Repair Bills Are Following.

The U.S. auto industry relies heavily on imported components: sensors, transmissions, electronic modules, and more. Roughly 60% of replacement parts used in U.S. auto repairs are imported, primarily from Canada, Mexico, China, Japan, and the EU, making them directly tariff-sensitive. Tariffs don’t stay at the border. They move through the supply chain and show up in repair invoices at dealerships and independent shops nationwide.

A 2025 survey found 38% of repair shops experienced tariff-related cost increases, driven largely by mechanical and electrical parts. Another 26% reported supply-chain friction, including delayed parts availability and higher shipping costs, that push invoices higher even when list prices haven’t spiked.

The components most affected include:

• Engines and internal components (turbochargers, fuel injectors, sensors)
• Transmissions and driveline components
• Steering and suspension modules
• Electronic control modules (ECMs, BCMs, TCUs)
• HVAC system components
• Hybrid and EV power electronics, inverters, and battery systems

For members without VSC coverage, this means unexpected repair costs just got more unexpected. For credit unions watching delinquency trends, it means one more pressure point on borrowers already managing higher loan balances and longer terms.

What the Numbers Show

Across common mechanical and electronic repairs, the pattern since pre-2020 is consistent: costs have increased 70–110%. These figures reflect typical paid claim averages across large U.S. service contract and warranty datasets, not manufacturer list prices.

Across mechanical and electronic systems, many repairs that averaged $1,000–$2,000 before 2020 now routinely land in the $2,500–$5,000 range, with major assemblies pushing well beyond. This is a structural shift in vehicle repair economics, not a short-term spike.

Real Claims. Real Exposure.

Not every high-dollar repair claim can be traced directly to tariffs alone. Labor rates, general inflation, and the rising complexity of modern vehicles all play a role. But together, these forces have produced claim amounts that would have been surprising just a few years ago:

• 2019 Ford Expedition: $16,951 (transmission, differential)
• 2021 GMC Sierra 1500: $11,219 (engine)
• 2022 Toyota Tundra: $14,053 (transmission/transaxle)
• 2020 GMC Sierra 1500: $13,920 (camshaft and control arm)
• 2018 BMW X1: $2,626 (thermostat housing)
• 2017 Cadillac ATS: $10,472 (infotainment display and transmission)
• 2021 Toyota Tundra: $6,890 (catalytic converter)
• 2018 Chevrolet Tahoe: $3,990 (transmission)

For members still paying on an auto loan, a repair bill of this magnitude doesn’t just create stress. It creates a decision: fix the car or make the payment. In many cases, that decision ends in delinquency or voluntary surrender. That’s portfolio risk, and it’s preventable.

The VSC Value Proposition Just Got Stronger

Your members don’t need to understand tariff policy to feel its effects. They just need to know that when their vehicle breaks down, they won’t be choosing between the repair and their loan payment.

A well-structured VSC program, one with meaningful coverage, true low or $0 deductibles, and a straightforward claims process, does exactly that. It absorbs the shock that tariff-driven repair costs are creating right now, before those costs turn into delinquencies.

This is also a moment to revisit the VSC conversation with members who passed on coverage at origination. Rising costs create genuine urgency that didn’t exist before.

What This Means for Your Non-Interest Income Strategy

Here’s the piece that often gets missed: as repair costs rise, so does the financial performance potential of a well-run VSC portfolio.

In a traditional program, your credit union earns its markup at the point of sale and nothing more, regardless of how claims perform. The administrator captures the underwriting profit.

In a credit union-centric model like CU Certified, 100% of underwriting profit returns to the institution. That means your credit union participates in the financial outcome of the portfolio, and as the case for VSC coverage becomes easier to make to members, higher penetration rates compound that return.

The tariff environment isn’t creating the VSC opportunity. It’s amplifying one that was already there.

Is Your Program Ready for This Moment?

If your current VSC structure limits your income to upfront markup, now is a good time to model what a different structure could return. If your coverage options don’t include the vehicle types and mileage ranges that reflect your actual loan portfolio, members may be slipping through without the protection they actually need.

Tariff-driven cost increases aren’t going away quickly. The credit unions that move now, whether by strengthening penetration, reassessing their VSC partner, or both, will be better positioned through the end of the year and into 2027.

Reach out to FocusOne today to request a free program analysis and Non-Interest Income Financial Proforma.

Reach out or connect with us on LinkedIn.

In indirect lending, the dealer is the gatekeeper. Every day, dealers decide which lenders get their applications, and speed is increasingly the deciding factor. Captive finance companies have spent years engineering workflows that deliver fast decisions, real-time status updates, and frictionless funding. Credit unions that cannot match that pace are losing deals before they start.

The good news is that credit unions do not need to become something they are not. They need to become faster, more consistent, and easier to work with. That is within reach, and it is where the opportunity lies in 2026.

Why Dealer Relationships Are THE Competitive ADVANTAGE

Dealer relationships are not transactional. They are built on trust, consistency, and predictability. A dealer who knows your credit union will deliver a decision in minutes, and fund cleanly, will route applications your way ahead of competitors offering marginally better rates.

According to Experian, captive finance companies control more than 57 percent of new vehicle financing, driven largely by digitally integrated workflows. That dominance is not accidental. It is the result of years of investment in speed and dealer experience.

Credit unions have a natural advantage that captives cannot replicate: the member relationship. But to activate that advantage, the indirect experience must earn the dealer’s confidence first.

What Dealers Actually Want FROM LENDERS

When dealers evaluate indirect lending partners, they are not only comparing rates. They are evaluating the entire experience of doing business together. The most competitive credit unions in the indirect channel excel in four areas:

• Fast, consistent decisions: dealers want to know what to expect, every time
• Real-time status visibility: no calls to chase down a loan status
• Clean, efficient funding: stipulations that are clear, reasonable, and resolved quickly
• Responsive communication: a team that picks up the phone and follows through

When these elements are in place, dealer confidence grows. When dealer confidence grows, application volume follows.

The Hidden Cost of Slow LOAN DECISIONS

Slow decisioning does not just lose the immediate deal. It damages the relationship. Dealers learn quickly which lenders create friction and which ones make their jobs easier. A pattern of slow turnaround, unclear stipulations, or inconsistent communication pushes your credit union down the routing priority list. Sometimes permanently.

The cost is not just one loan. It is a diminished position in the dealer’s workflow that compounds over time.

For credit unions running primarily manual underwriting processes, this is an urgent issue. As application volume from younger borrowers continues to grow, manual workflows cannot scale to meet dealer expectations without adding strain to internal teams.

Building a High-Performance Dealer Program

Credit unions that are winning in the indirect channel share several common traits. They have invested in technology that reduces decision time without sacrificing credit quality. They have established clear communication standards with their dealer partners. And they have built internal workflows that can handle volume without creating bottlenecks.

Specifically, high-performing programs are prioritizing:

• Automated decisioning for straightforward approvals, freeing underwriters for complex files
• Digital document collection and e-sign to accelerate funding timelines
• Dealer portals that provide real-time loan status without requiring a phone call
• Structured onboarding for new dealer relationships to set expectations from day one

These are not aspirational investments. They are the baseline for competing in a market shaped by next-generation borrower expectations and captive lender benchmarks.

For a deeper look at the infrastructure behind high-performing indirect programs, download our Q2 white paper, Scaling Indirect Lending for the Next Generation.

How FocusOne Strengthens Your Dealer Position

FocusOne helps credit unions compete at the dealer level by combining experienced underwriting teams with digital-first workflows and an established dealer network. Our approach is designed to deliver the speed and consistency dealers expect, without adding operational burden to your internal team.

We work alongside credit unions to evaluate current dealer relationships, identify where friction is costing applications, and implement processes that improve both decision speed and dealer confidence.

Strong dealer relationships are built one interaction at a time. With the right infrastructure in place, every interaction becomes an opportunity to reinforce your credit union’s position as the preferred lending partner.

If you are ready to strengthen your indirect program’s dealer performance, connect with Kurt Howard on LinkedIn to request an Indirect Program Review. Or email him at Khoward@focusone.com. 

For most of the past two years, mortgage lending has been defined by hesitation. Buyers waited for rates to fall. Sellers held onto pandemic-era mortgages. Institutions waited for clarity.

That environment has changed, but not in a straight line.

Mortgage rates have remained volatile, with brief periods of improvement quickly reversing due to inflation data, Federal Reserve signals, and global pressures. Each dip has triggered bursts of demand, reinforcing a clear pattern: opportunity exists, but it’s short-lived and unpredictable.

The credit unions best positioned for this market are not the ones trying to predict where rates will go next. They are the ones operationally ready to act when borrowers do.

Why This Market Cycle Matters

The “lock-in effect” that froze the housing market is beginning to thaw. More homeowners are willing to move, inventory is gradually improving, and first-time buyers are reentering despite affordability pressures.

Affordability remains stretched, but life events don’t wait for perfect rates. Buyers are adjusting expectations, and when rates improve slightly, activity returns quickly.

This market does not build gradually. Volume comes in waves.

When institutions aren’t prepared, that volume doesn’t pause; it shifts. Borrowers move to lenders who can respond immediately, and those relationships are difficult to win back.

What Operational Readiness Actually Looks Like

In a volatile market, readiness is not theoretical. It shows up in execution, especially when demand spikes.

Credit unions positioned to win have already built:

• Flexible cost structures
  In a margin-compressed environment, fixed overhead becomes a liability. Scalable, variable-cost models allow institutions to absorb volume without overextending resources.
• Technology that drives speed and certainty
  Today’s borrowers—and real estate agents—expect fast answers. With the right technology infrastructure, credit unions can move from application to pre-approval in a matter of hours, not days.

That speed is not just operationally efficient; it is decisive.

A borrower with a same-day pre-approval is more competitive in a multiple-offer scenario, and agents take notice. In many cases, the lender who can deliver certainty first becomes the lender who wins.

• Active secondary market execution
  Loan sales are not a backup plan. They are a core liquidity and capacity strategy. In a market where gain-on-sale margins are tighter, execution discipline matters more than ever.
• Scalable compliance infrastructure
  Regulatory expectations don’t ease when volume increases. TILA, RESPA, and Fair Housing compliance must be embedded into the process, not layered on after the fact.

The Member and Agent Experience Equation

In a purchase-driven market, the competition is not just rate; It’s execution.

Borrowers are comparing:

• How quickly they can get pre-approved
• How clearly they are communicated with
• How confidently their loan will close on time

Real estate agents are doing the same.

A credit union that can pre-approve a borrower within hours, communicate proactively, and close on schedule becomes a trusted partner, not just a lender. That trust drives referrals and repeat business.

One that creates delays or uncertainty risks being replaced before the transaction even begins.

Volatility Isn’t Going Away

Market volatility will continue to define 2026. Rates will rise and fall in response to economic data and global events, and borrower behavior will follow those movements.

The institutions that succeed will not be the ones that predict rates correctly. They will be the ones built to perform regardless of where rates land.

That means:

• Flexible operating models
• Technology-enabled speed
• Reliable secondary market access

In this market, readiness is the differentiator.

How FocusOne HELPS CREDIT UNIONS MOVE FASTER

Across the credit unions we partner with, the programs performing best in today’s market share a common trait: they are built to move when the market moves.

FocusOne helps credit unions design and operate mortgage programs that combine scalable operations, modern technology, and execution expertise, so you can deliver faster decisions, stronger member experiences, and consistent results across rate cycles.

The window won’t stay open long, but with the right infrastructure, you don’t have to wait for the perfect moment to act.

Let’s talk about whether your program is built to move. Email us at moreinfo@focusone.com or visit focusone.com/mortgage-solutions.

Stay connected on LinkedIn.

As credit unions move deeper into 2026, one shift is already reshaping the auto finance landscape: the rise of the next-generation borrower. Millennials and Gen Z now represent a significant and growing share of first-time auto buyers. They are mobile-first, value-driven, and expect speed, transparency, and convenience as standard, not differentiators.

For credit unions, this shift is no longer something to prepare for. It is actively influencing loan volume, dealer relationships, and long-term member growth. Institutions that have modernized their indirect strategies are gaining momentum. Those that have not are already feeling pressure at the point of decision.

The New Front Line of Member Acquisition

Indirect lending places credit unions at the exact moment of need for younger consumers. For this generation, the dealership has become the primary entry point into the car-buying and financing journey. Industry data consistently shows that most first-time auto buyers now begin their financing experience at the dealership rather than with a lender.

These borrowers expect fast, seamless interactions and a lending experience that mirrors the digital tools they use every day. This is not a temporary trend. It is a structural shift that requires credit unions to modernize how they attract, evaluate, and retain the next generation.

Those that adapt quickly will lead. Those that delay risk losing long-term relevance.

The Next-Gen Borrower: Expectations vs. Legacy Processes

Younger consumers are reshaping expectations across all financial services.

Digital Access: They expect intuitive, mobile-centric experiences from application to funding.

Immediate Answers: Conditioned by instant-access platforms, they are unwilling to tolerate slow, paper-heavy workflows.

Limited Credit Depth: Many enter the market with thin credit files due to student loans, delayed homeownership, and evolving financial milestones. A more modern approach to underwriting is required.

These expectations expose gaps in legacy lending structures. The question for credit unions is no longer whether to evolve, but how quickly transformation can be achieved without increasing risk.

Want to go deeper on reducing loan approval friction? Read FocusOne’s Q1 White Paper: “Reducing Friction in Loan Approval Workflows: A Roadmap to Higher Pull-Through and Efficiency.”

Indirect Lending: The Gateway to Lifetime Loyalty

Indirect lending remains the most effective channel for introducing younger borrowers to the credit union value proposition. A first auto loan often becomes the foundation for a broader relationship, leading to:

• Checking and savings accounts
• Credit cards
• Future auto or personal loans
• First-time mortgages
• Long-term member loyalty

When executed well, indirect relationships are no longer transactional. They are foundational to sustained membership growth.

Four Pillars of a Scalable, Next-Generation Indirect Program

These pillars align closely with the themes explored in FocusOne’s Q2 white paper on scaling indirect lending for the next generation. The paper examines how credit unions can expand capacity, support higher application volumes, and maintain consistency as younger borrowers increasingly enter the indirect channel.

To win the next generation, credit unions must build indirect programs around four strategic pillars.

1. Velocity Without Compromising Discipline

Younger borrowers expect quick decisions. Competitive programs leverage automated decisioning, streamlined stipulations, and efficient verification to deliver intelligent evaluations at speed, without sacrificing credit quality or risk oversight.

2. Digital Ease from Start to Finish

A fully digital experience is now the cost of entry. This includes mobile-friendly applications, e-sign and e-doc capabilities, and real-time communication that keeps borrowers informed throughout the process.

3. Underwriting That Sees Potential, Not Only History

Many next-gen borrowers demonstrate strong financial habits despite limited credit history. Modern underwriting approaches that incorporate alternative data and broader financial indicators enable responsible access while protecting portfolio performance.

4. High-Performance Dealer Partnerships

Dealers are often the first impression of your credit union. High-performing programs invest in dealer relationships, consistent communication, and fast funding practices. Strong dealer engagement directly influences application volume, loan quality, and member conversion.

How FocusOne Accelerates Your Transformation

For credit unions looking to modernize without overextending internal teams, the right partner can accelerate progress.

FocusOne helps credit unions execute indirect strategies that align with next-generation expectations while maintaining operational discipline. Our support includes:

• Fast, consistent decisioning driven by experienced underwriters
• Digital-first workflows that reduce friction for borrowers and dealers
• Access to a proven dealer network supported by structured communication
• Real-time analytics that strengthen underwriting agility and portfolio performance

Our goal is to help credit unions modernize confidently and scale responsibly, without adding operational strain.

Your Action Plan: Capture the Momentum

Credit unions can take immediate steps to strengthen their position:

• Audit workflows to identify and remove friction
• Invest in technology that improves decision speed and accuracy
• Refine underwriting strategies to responsibly support thin-file borrowers
• Build onboarding journeys that convert indirect borrowers into full members
• Collaborate with expert partners who provide added depth and scalability

These actions position credit unions to win both the loan and the long-term relationship.

The Next Generation Is Ready. Are You?

Younger borrowers are redefining how lending relationships begin. Indirect lending is the most effective way to reach them, influence their experience, and earn their trust.

Credit unions that modernize today will be best positioned to grow membership, deepen engagement, and strengthen performance well into the next decade.

If you are ready to assess how well your current indirect program aligns with next-generation expectations, reach out to request an indirect lending program review or connect with Kurt Howard on LinkedIn to start the conversation. Or email him at Khoward@focusone.com. 

With the right focus and support, your credit union can meet the next generation where they are and turn first-time auto buyers into lifelong advocates.

Ready to scale your indirect program for the next generation? Download FocusOne’s Q2 White Paper: “Scaling Indirect Lending for the Next Generation: Growth Without Burnout.”

By Marcy Murray, Business Development Representative

For years, Vehicle Service Contracts have been treated as a one-time income opportunity, a product offered at the point of loan origination, with results that were inconsistent at best. Some credit unions see modest income from limited up-front markups. Others struggle with penetration rates and member engagement. Many never fully understand how much revenue their current program leaves on the table.

The reality is this: a well-structured VSC program is not just a protection product. It is a meaningful revenue driver, one that can generate sustainable non-interest income, improve loan performance, and deepen member relationships simultaneously.

But not all VSC programs deliver equally. The difference between a program that generates real return and one that underperforms almost always comes down to structure.

Non-Interest Income: The Revenue Hiding in Your Portfolio

Credit unions are under constant pressure to diversify revenue beyond interest income. VSCs are one of the most direct paths to doing so, but only when the program is built to return value to the institution, not to a third-party administrator.

In a traditional VSC arrangement, underwriting profit (the money left over after claims are paid) is retained by the provider. The credit union earns only its markup at the point of sale. That markup is real income, but it represents a fraction of the total financial opportunity.

In a credit union-centric model like CU Certified, 100% of underwriting profit is returned to the institution. That changes the math significantly.

Changing to CU Certified is one of the simplest, highest‑impact decisions you can make. You’re already offering a vehicle service contract program. You’re already earning the upfront markup. By switching to CU Certified, you unlock the opportunity to double your current revenue, all by replacing one provider with another.

 And the best part? CU Certified delivers truly best‑in‑class coverage, the kind of protection your members expect and deserve.

 But before you decide, ask yourself a few pointed questions about your current provider:

• How much of every premium dollar you collect is actually being used to pay member claims?
• How much is being absorbed by administration fees?
• How much of the unused premium ever makes its way back to your credit union, if any at all?

If you don’t love the answers, or aren’t even sure what they are, it’s a clear signal to reevaluate your program and choose a partner who delivers real value to you and your members.

That gap compounds over time. Year over year, the difference between what a credit union earns and what it could earn under a better structure represents a substantial and recoverable revenue opportunity.

Penetration Rates Drive Everything

The single biggest lever on VSC revenue is penetration, meaning the percentage of auto loans that include a VSC. Even modest improvements in penetration can produce significant income gains.

Penetration doesn’t improve by accident. It improves when the product is easy to quote, easy to explain, and easy for members to say yes to. Integrated quoting within the LOS, true $0 deductible options, and frontline training all contribute to higher close rates.

A VSC program that creates friction at the point of sale will consistently underperform, not because the product is wrong, but because the process gets in the way.

The Hidden Cost of Deferred Maintenance and Loan Default

VSC ROI isn’t measured only in premium income. It also shows up on the portfolio side, specifically in delinquencies that don’t happen.

When a member faces an unexpected repair bill of several thousand dollars and has no coverage, the financial pressure doesn’t stay contained. It competes with their loan payment. It may result in deferred maintenance that reduces collateral value. In some cases, it becomes a contributing factor in default.

A VSC program that members actually use, one with clear coverage, low or no deductibles, and a straightforward claims process, doesn’t just create goodwill. It reduces the probability that a mechanical breakdown becomes a loan performance issue.

That risk mitigation has real financial value, even when it’s difficult to quantify precisely on a per-contract basis.

Owning Your Portfolio: The Structural Difference

The most important question any credit union can ask about their VSC program isn’t about coverage options or deductibles. It’s this: who benefits when claims come in below expectations?

In a standard third-party arrangement, the administrator keeps the surplus. The credit union earns its markup and nothing more, regardless of how well the portfolio performs.

In a model where the credit union owns its portfolio, retaining underwriting profit and participating in the financial performance of the portfolio, the institution’s return is directly tied to the quality of the program design, the appropriateness of coverage for the member base, and the efficiency of claims management.

CU Certified was built on this principle. The credit union is not a reseller of a third party’s product. It is a participant in a program designed to work in its favor, financially and structurally.

The ROI Equation Is Bigger Than You Think

When credit union leaders assess the ROI of a VSC program, the analysis often starts and ends with contract markup. That’s a reasonable starting point, but it understates the full opportunity.

A complete ROI view includes:

• Non-interest income from markup at point of sale.
• Underwriting profit returned to the institution.
• Reduction in repair-driven delinquencies and defaults.
• Preservation of collateral value across the loan portfolio.
• Member retention driven by positive claims experiences.
• Increased loan volume: members who trust their protection products are more likely to return for future financing.

Individually, each of these has value. Together, they make a strong VSC program one of the highest-returning ancillary investments available to a credit union today.

Is Your Current Program Delivering This Return?

Most credit unions don’t know the answer to that question, because their current provider doesn’t give them the visibility to find out.

If your VSC income is limited to markup, if underwriting profit goes elsewhere, or if your team lacks the tools and training to sell effectively, you are likely leaving substantial revenue on the table every year.

FocusOne can help you model what a credit union-centric VSC program could generate for your institution, based on your loan volume, your current penetration, and your portfolio mix.

Request a no-cost program analysis and Non-Interest Income Financial Proforma, to see what your VSC program should be returning, and what it could return with the right structure.

For many institutions, VSCs have become a core part of their ancillary product revenue strategy.

Reach out to FocusOne today to get your free analysis, or connect with us on LinkedIn.

Your members are not waiting for the dealership to begin their car-buying journey. They are researching vehicles, comparing payments, and forming financing expectations online long before they ever step onto a lot.

The real question is no longer whether this shift is happening. It is whether your credit union is positioned where those decisions are being formed.

For many institutions, auto lending still begins at the dealership. For today’s consumer, it begins on a screen.

That difference matters more than most lending strategies account for.

The Auto-Buying Journey Now Starts Online

Vehicle shopping has become a digital-first experience. Consumers now conduct most of their research independently, evaluating models, pricing, and financing scenarios before ever speaking to a dealer or lender.

This behavior reflects a broader shift in consumer expectations. People want:

• Transparency in pricing and payments 

• Control over timing and decision-making 

• A seamless transition from research to financing 

In other words, they expect the same digital convenience in auto buying that they experience everywhere else.

When credit unions are not present in this early stage, members still move forward. They engage with whoever is visible, whether that is a third-party marketplace, a dealership platform, or a national lender.

By the time the credit union enters the conversation, key decisions may already be made.

Why Dealership-First Lending Limits Credit Union Influence

Indirect lending remains essential, but it captures only a single moment in a much longer decision process.

When engagement begins at the dealership, the credit union is often responding rather than guiding. Financing expectations may already be shaped. Rate comparisons may already be underway. The institution’s role becomes transactional instead of advisory.

This timing gap has strategic consequences:

• Reduced influence over financing decisions 

• Increased pricing pressure 

• Weakened opportunity to deepen the member relationship 

Simply put, entering late means competing harder for less control.

Extending the Credit Union Digital Branch into Auto Shopping

To stay relevant in today’s environment, credit unions must shift engagement earlier, into the research and discovery phase, where purchase intent develops.

Member Auto Center enables that shift.

Designed specifically for credit unions, the platform embeds the vehicle shopping experience directly into your digital ecosystem, effectively extending your branch into one of the most significant financial decisions members make.

Through Member Auto Center, members can:

• Shop new and used vehicles online from your choice of dealer partners 

• Compare pricing and payment scenarios 

• Connect a member’s car search directly to trusted credit union financing 

For credit unions, this transforms auto lending from a reactive process into an intentional engagement strategy.

Instead of waiting for applications to arrive, institutions can participate in shaping decisions from the start.

Digital Car Buying Is Now Core Infrastructure

Online vehicle shopping is no longer an innovation, it is infrastructure.

Members already trust their credit union with complex financial decisions. Increasingly, they expect that trust to extend into the vehicle-buying experience. When that expectation is not met, members do not abandon convenience. They abandon the institution’s role in the process.

Credit unions that integrate digital auto shopping maintain visibility throughout the entire journey, from early research through financing. They compete more effectively with national lenders and fintech platforms while reinforcing their position as members’ primary financial partners.

Those who do not risk becoming invisible during the most influential stage of the decision.

From Reactive Lending to Strategic Auto Engagement

As the lending landscape evolves, the central question is no longer whether digital auto shopping matters. It is whether your institution is positioned to participate where decisions begin.

Member Auto Center provides a scalable way to align lending strategy with modern consumer behavior, complement indirect programs, and strengthen long-term loan growth.

The shift is straightforward but significant. Engage earlier. Guide decisions sooner. Meet members where they shop, not just where they sign.

Is your credit union positioned at the beginning of the auto-buying journey, or only at the end?

Request a Member Auto Center demo to see how FocusOne helps credit unions stay at the center of the financing conversation.