Wednesday, June 20, 2012

Stop the Slow Leak in Your Auto Loan Portfolio

 By John Blom and Margie Church  Originally published on

Vehicle purchases frequently are impulse buys, and auto loans have become serious bread and butter to many credit unions. The wise marketer knows that getting a member's repeat business can't be an assumption. It must be earned as part of a strategic effort. 

"Hail Mary Marketing" has its place as a solid prospecting strategy. Use it to target members without auto loans and to create awareness in the communities the credit union serves. It works. However, this strategy isn't the best way to retain the valuable auto loan business the credit union already has. You need to have a more focused effort.

Stop-Leak Retention Strategies
We recommend developing a solid retention program today to keep millions of dollars in auto loans from leaving your credit union tomorrow. How? Bi-annually, append to your data with vehicle values to provide a good guide to how much equity a member has.  Sort the data, and create targeted messages depending on where this member is in their auto loan lifecycle. 

Here are the important markers to look for:
      The vehicle's trade-in value is higher than the loan balance. This is an open artery for an impulsive purchase. These loans are most vulnerable right now. These members must be hearing from you very regularly to ensure you're not forgotten. Pre-approval and special financing incentives via direct mail and email are good tactics to use. Perhaps a personal call from member services or the loan department can be made, too. 

     The vehicle's retail value is higher than the loan balance. Obviously these members can sell their vehicle outright, and use the money for a down payment on something new. The loan is vulnerable if the mood strikes. Increase your communication frequency to these members. Remind them about the benefits of pre-qualification, low rates, additional discounts, and any services that might steer them back to the credit union when they make a move. A refinancing offer to access the cash equity is something to consider, too.

     The member has no equity. Contact them a few times a year to illustrate their equity progress. Communicate sound financial practices and other credit union services to deepen the relationship with you.

Budgets are still very tight in America, and people save money by financing through a credit union. Help members avoid the costly mistake of choosing dealer or bank financing.  A strong retention program throughout the loan lifecycle reminds them their credit union is the best place to come for their vehicle (and all) financing needs. It strengthens your auto loan portfolio and other credit union products and services, too.

Pinpoint Direct Marketing creates data-driven, electronic and print marketing campaigns for the financial industry. Its customized campaigns achieve excellent results without premium costs. Learn more about Pinpoint Direct Marketing at or call Kerry Blom, owner, 866-784-7555.


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