TUMWATER – Officials at O Bee Credit Union find themselves selling used cars, a consequence of South Sound’s slower economy.
Over the past year, O Bee has seen an increase in repossessed vehicles, including some owners voluntarily returning their cars to the credit union because they are unable to make the payments, Bruce Cramer, president and chief executive of the Tumwater-based credit union, said Thursday.
When the economy is stronger, O Bee typically repossesses eight to 12 cars a year, but so far this year that number has climbed to 37, he said. Cramer called the current recession one of the most challenging he has experienced in his 40 years working at credit unions.
Although repossessions are on the rise, it still is a small percentage of the 2,600 car loans the credit union does annually, Cramer said.
In addition to the rising number of bad car loans, total statewide credit union car loans are down, said David Bennett, spokesman for the Washington Credit Union League, a credit union trade association based in Federal Way.
Credit unions traditionally have been popular destinations for car loans because of competitive interest rates, he said. Statewide credit union car loans peaked at more than $7 billion in 2007, but fell to $6.8 billion in 2008 and stand at $6.7 billion through early March, according to WCUL data.
Of the 37 repossessions at O Bee, 12 have been voluntarily returned, said Dave Echtle, vice president of lending. Once the vehicle is returned to the credit union, it usually is sent to an auction company in Auburn, but in an effort to better recover 60 percent to 80 percent of the car loan, O Bee first has tried to sell some cars at its main branch off Cleveland Avenue.
“We are not a used car dealership, but we try to mitigate our losses to a certain degree,” he said, adding that there are auction-related fees that make that process costly.
Before they sell a car, though, every effort is made to help the borrower restructure the loan or payment, Echtle said. Some borrowers, though, simply walk into the credit union lobby and drop off the keys, he said.
O Bee is accepting bids on a 2007 Ford Expedition that was voluntarily returned to the credit union by an owner who was unemployed but finally found out-of-state work. Rather than make payments on two vehicles, the owner decided to let the other car go.
“It was feed my family or pay the car loan,” said Echtle, recalling the conversation.
The Expedition has been on the lot for about two weeks and has received one bid. Vehicles that don’t receive at least three bids are sent to auction. So far, the credit union has sold six of the 12 cars that were voluntarily returned.
Washington State Employees Credit Union, the second largest credit union in the state, has taken a different approach and scheduled a sale for car dealers in August for 16 vehicles repossessed by the credit union.
So far in 2009 the credit union has repossessed 526 vehicles, 97 of them voluntary, compared with 182 voluntary repossessions for all of 2008, spokeswoman Ann Flannigan said.
The “voluntary” numbers are down so far this year because the credit union is working more closely with the borrower to help them keep their car, she said. The credit union repossessed more than 700 vehicles in 2008, Flannigan added.
Bennett said he was aware of credit unions trying to sell cars returned by their members.
“I can’t imagine doing it (returning a car), but it is unfortunate and it is happening,” he said. “There’s no denying it.”
Rolf Boone: 360-754-5403