Auto Don, National CU ink auto loan deal
Published:Friday | November 1, 2024 | 12:10 AMNeville Graham - Business Reporter
Auto parts distributor and second-hand car trader Auto Don has inked a deal with National Credit Union that will see the company processing applications from customers for auto loans.
Auto Don’s Special Projects Coordinator, Donnell Martin, says the companies have an arrangement under which the Auto Don’s customers will have their loans processed at the company, leaving authorisation and disbursement to the credit union.
Previously, customers would send their loan application documents to Auto Don, which would then find a financial institution to finance the loan. The new arrangement positions Auto Don as a one-stop shop in the car loan market, Martin told the Financial Gleaner.
“In addition to the loan document coming to us, the credit union would allow us to complete their loan application form with the customer, as well as their membership application form. We would prepare the pre-loan assessment, including the credit check for each customer. Essentially, we’re completing 60 per cent of the job of the credit union, or the financing institution, and we’re making their lives easier,” Martin said.
Marketing Officer at National Credit Union, Charla-Ann Francis, said motor vehicle loans have always been a big part of its business, given that the credit union basically served the financial needs of staff and family at National Commercial Bank Jamaica.
“It’s an understanding that we have where Auto Don, for the next 12 months, will be writing loans on behalf of the credit union, easing the amount of processing that National CU has to do,” Francis said.
Seamless process
Martin says Auto Don is also creating a more seamless process for the customer by assisting with other areas.
“We’re also providing them with facilities to get their insurance sourced, and we also handle the transfer of documents from us to the tax office. You can stay wherever you are and never have to leave your office or your home, and you can get a car,” Martin said.
The loans will be for motor vehicles up to 10 years old. Interest rates range between eight and 14 per cent per annum on the reducing balance, with up to 10 years to repay. Newer vehicles get the lower rate, Francis said.
National Credit Union is small in terms of membership but medium-sized in terms of assets. It has consistently managed to punch above it’s weight by virtue of its financial strength. Membership is about 6,900. Assets stand at just over $2 billion, with a loan book of about $1.56 billion, Francis said.
The credit union had its origins in being a savings and loan institution for all staff at National Commercial Bank. The narrow bond restricted business at the small credit union until the Registrar of Co-operatives expanded the bond to include banking staff from other institutions and their families. The bond has also been broadened to include persons doing business with financial institutions.
Francis says one of the best-selling products at the credit union has been motor vehicle loans. Given the credit union’s expanded mandate, the arrangement with Auto Don is designed to vault National CU beyond just serving bank staff, she added.
“The growth has been good so far. While our core business still comes from the bank, we’re spreading our wings and we’re hoping to change that soon,” Francis told the Financial Gleaner.
Martin says the idea for Auto Don to go this far into auto loans had its genesis in the identification of a pain point for consumers when buying vehicles: that of having to run between several offices.
Auto Don started as a wholesaler and retailer of brake disk pads in 1997 then branched out into general auto service parts by year 2000, supplying other retailers nationwide while retailing from its store at Keesing Avenue in Kingston. The company diversified into trading used cars in 2015, operating from its Keesing Avenue base.
Company founder and CEO Donahue Martin has a background in banking, having worked at Trafalgar Commercial Bank, which was taken over by conglomerate GraceKennedy, over two decades ago, and rebranded as First Global Bank.
“He put in place an infrastructure that would allow us to operate like a bank, as it pertains to the pre-administrative or the pre-investment segments,” the special projects coordinator said of the founder, who is his father.
“It was in line with the pain points that would have been presented, that we decided that it would be an opportunity that was worthwhile for us,” Martin said, adding that he expects to see a doubling of business from eight to 10 cars per month to about 20 per month within a year.