Four Things That Improve Auto-Loan Refinance Results

If your auto loan portfolio has been steadily increasing along with the lending industry as a whole, that’s great. But don’t be content.

Consumers are returning to car dealerships (virtually and in person) and that means some will end up with interest rates, loan terms, and warranties or payment protection options that your credit union can beat—if you can find these buyers and deliver an effective message.

Auto loan refinancing programs can help you reach these recent car buyers. However, your results can vary a great deal based on these four factors:

  1. A properly pre-screened mailing/email list: Selecting the proper parameters for pre-screening membership data takes experience. It’s easy to make mistakes—such as not screening out your credit union’s own auto loans—that will cost the credit union money or result in too many non-qualified members receiving letters.
  2. An incentive: Consumers are bombarded with auto loan offers with impressive-looking interest rates. Make your offer stand out by offering something useful: a gas card is typical. If you project that your interest margin will be too thin to justify the cost of an incentive, consider offering favorable terms such as deferring the first payment for 60 or 90 days. Be sure any incentives comply with   limits or restrictions required by state or federal regulations.
  3. A strong, professional, legally compliant letter/email: When creating the marketing piece, try to be objective about your in-house copywriting and design capabilities. The design and packaging need to compete for a busy person’s attention, and the text must make your offer compelling enough to draw a response—these are jobs for experienced direct-marketing pros. Keep in mind, however, that your credit union is responsible for ensuring that the language complies with regulations, so choose a partner with credit union experience in your state.
  4. Service oriented cross-selling skills: The letter itself is a springboard to conversation. Lending staffs must be trained to engage members to learn about the member’s financial situation, and find additional credit union products and services that meet their needs. Creating a stream of non-interest income through warranties and payment protection products could help offset the cost of the campaign.

Track the “Halo Effect”

Each campaign should include a return-on-investment analysis including refinance loans closed for those on the mailing list, the average credit score and loan balance for all respondents, and other factors.

In addition, measure the “halo effect,” that is, all of the products — not just auto loans — acquired by those on the mailing list over the following six months. If you consistently see a halo effect, it’s a good indication your campaign is running effectively.

If you have questions about loan marketing solutions, please contact Loan Generation Marketing contact at growloans@cunamutual.com or 800.356.2644 x665.2221.

Strategic Link is the NWCUA’s wholly-owned service corporation, using the power of aggregation to provide the Association’s member credit unions with exclusive, high-quality, competitively-priced products and discounted services. Contact Director of Strategic Partnerships Craig Reed at creed@nwcua.org today to find out how Strategic Link can help your credit union save money while meeting its goals in 2014 and beyond.

Posted in Marketing & Communications.