What's the Dilly-o with auto & indirect: a buyer's guide for credit unions

The Dilly-o

NCUA says it has seen "seemingly healthy credit unions fail in a matter of months" because indirect programs spun out of control.² Its guidance says fraud prevention and detection should be part of the credit union's oversight program.³ Pick a platform that lets you set the dealer rules, catch bad documents before funding, and report results dealer by dealer.

How we'd size up a vendor

1. Dealer oversight - can the platform show you each dealer's loan quality, lien status and proof of insurance in one place? Ask to see how a single problem dealer would show up before it becomes a portfolio problem.
2. Fair lending - does the system record dealer markup and pricing on every deal so you can test it for disparities? You want that data in a form your compliance team can pull without a custom project.
3. Fraud checks - how does the vendor validate identity, income and deal documents before you fund the loan? Ask what it catches automatically and what still lands on your funders' desks.
4. Exit terms - what would it cost your credit union to leave, and which termination and default terms will the vendor negotiate?

What changed this year

CU Today reported credit union auto delinquency at 90 basis points in the third quarter of 2024, up 11 basis points over that year.⁴ The rate stood at 96 basis points in the fourth quarter of 2025, about where it was a year earlier.⁵ After the collapse of auto lender Tricolor, losses at community and regional banks ranged from $22 million at Renasant to $200 million at Fifth Third.⁶

Will it work with your systems?

Origence says credit unions on its CUDL network can use the indirect module of its arc OS origination system or connect an existing loan origination system (LOS).⁷ Fuse Finance offers a dealer and merchant portal, and it is listed on Jack Henry's Fintech Integration Network for Symitar credit unions under lending and deposits.^C Ask your provider which LOS and core it boards indirect loans into today, and ask for a credit union on your core that you can call.

What other credit unions did

On Dec. 10, 2024, Coastal Credit Union and Truliant Federal Credit Union partnered with TrueBuy Automotive to create Credit Union Auto Marketplace, a used-car buying experience for members.⁸ A California's Credit Unions article describes a lending team that uses automation to identify and sort over 100 document types used in indirect auto lending.⁹

What your examiner will ask

NCUA made auto lending, and indirect programs in particular, a top supervisory priority for 2024 exams.¹⁰ Its indirect lending guidance expects quality control to confirm perfected liens, proof of insurance and accurate deals.³ It also expects internal audit to test each dealer's loans through direct member contact.³ And it calls for static loan pool results compiled for each vendor and for the overall program.³ For 2024, NCUA said it would run fair lending exams at certain federal credit unions.¹¹¹² Expectations under the Equal Credit Opportunity Act (ECOA) and Regulation B are unchanged.¹³¹² Credit unions should run ongoing analysis of indirect pricing data for prohibited disparities.¹³¹²

What it costs

Most indirect platforms do not publish their pricing, so expect to get a quote. A CRIF case study on a $210 million credit union cites a funding fee of up to $199 per funded loan.¹⁴ Open Lending reports average program fee revenue of $538 per certified loan in the first quarter of 2026, down from $550 a year earlier.¹⁵ Time to implement is not public either, so ask for dates from a recent client on your core. NCUA warns that some credit unions accepted large buyout or termination penalties believing them fixed, though early termination, escape and default terms are often negotiable.¹⁶

Food for thought

We'd give document checks the closest look in any indirect demo, since that is where you can test a vendor's fraud claims. We'd ask every vendor how its checks will keep up over the next two years, and write that answer into the contract.