Credit unions are focused toward specific groups of people, be they bounded by a particular employer or a geographic region. So it seems odd that credit unions would rush to try to find members on an online auction site that theoretically draws customers from around the world.

Yet more than 100 credit unions have signed up to make auto loan offers through Burlington-based website MoneyAisle.com. MoneyAisle opened in 2008 with its initial product, an online auction where potential depositors sign on, apply, and have member banks essentially bid in a competition to offer the highest rates for their money.

MoneyAisle is paid a flat fee by participating institutions for business generated by the site, according to founder Mukesh Chatter.

Gaining Traction

This spring, MoneyAisle began its latest venture, in which would-be borrowers can shop for deals on auto loans after filling out some basic information. Vehicle loans are commonplace among credit unions’ loan offerings, and the idea of hunting for prospects evidently appealed more to credit unions than banks – of the 123 total institutions partnering with MoneyAisle to bid on auto loans, more than 100 are credit unions, Chatter said.

Thomas Becker, vice president of lending at Hanscom Federal Credit Union, headquartered at Hanscom Air Force Base, said the institution joined up in April and has gotten 18 new auto borrowers through the site since then. That’s not much compared to the 180-200 auto loans the credit union generally closes per month, but Becker said it’s been a cheap way to draw in new members. 

With roughly 45,000 members, the institution can serve any federal employee who lives in Massachusetts, as well as the employees of more than 200 small businesses in the state approved as “selected employer groups” for Hanscom. 

After a MoneyAisle.com visitor fills out some basic information, including his or her home zip code, the site presents a number of different deals from specific institutions. The customer then picks a place to apply, and sends contact information along to the institution. After receiving the information, Becker said, his credit union then contacts the borrower to make sure he or she qualifies for membership.

Chatter said in addition to the 123 institutions offering auto loans, 140 are participating in the site’s deposit auctions, and another 100 are in contract discussions to participate in either of the two categories.

The idea for allowing banks to compete over deposits was hatched during a time before the financial crash, Chatter told Banker & Tradesman, when competition for deposits was intense.

MoneyAisle launched in the summer of 2008, right before the market crash sent many consumers scurrying to secure their money in bank accounts. With the flood of new depositors knocking on their doors, banks had less need to compete and MoneyAisle had to work harder to gain attention from potential partner institutions.

Still, Chatter said, the site is getting good traction and has plans to launch new banking and lending products in the future, hoping to make MoneyAisle a platform for consumers to find the best deals on many products – and provide a cheap, simple way for banks and credit unions to nab customers with a minimum of effort and expense.

Stuck In Idle

Chatter said the current rate environment makes auto loans particularly appealing at the moment. With low interest rates, many institutions would rather make a short-term auto loan – something that will last only a few years – at the current rates, rather than make a longer-term mortgage loan that, if they keep in their portfolios, will bring in low interest income for many years to come.

But despite new life in auto sales, auto lending has lately been treading water or sinking at many local credit unions, according to recent data from the National Credit Union Administration, the industry’s regulator.

As of the end of the first quarter, Brockton-based HarborOne Credit Union’s vehicle loans were mostly flat – up just 1.1 percent for new vehicles (to $208.4 million) and 3.2 percent (to $264.5 million) for used vehicles, compared to the fourth quarter of 2009.

Lowell-based Jeanne D’Arc Credit Union saw lending dip nearly 10 percent for new vehicles and down nearly 2 percent for used. Even Hanscom saw auto lending overall fall at the end of the first quarter, down 9 percent to $27 million for new vehicles, but up almost 2 percent, to $49 million, for used cars. Both Jeanne D’Arc and Hanscom have seen wavering levels of lending over the previous four quarters, according to the NCUA.