Stop the Slow Leak in Your Auto Loan Portfolio

 By John Blom and Margie Church  Originally published on CUinsight.com.

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 www.PDMKT.com or call Kerry Blom, owner, 866-784-7555.

Here and Gone

 

By John Blom and Margie Church 

Sometimes we get so busy reacting to the current trend, that we lose focus on the future. Yes, auto buying season is upon us and rates are fantastic. This year is projected to be very strong for manufacturers and dealers. Consumers are loosening their purse strings and shopping for vehicles to replace those they've held on far longer than they historically have.

With auto shows popping up everywhere, it's the perfect time to run a pre-approved or pre-qualified promotion to your members. Arm them with money to shop realistically for a vehicle they want— and you keep their business. Everyone is happy

Going after brand new auto purchases might be a no-brainer, but what about the members who have equity in their vehicles? They are ripe pickings for a trade-in and a new loan, too. Have you made the credit union's rates and terms top-of-mind to help ensure these members don’t make the mistake of financing at the dealership or bank? Ouch.

And as long that new car scent is in the air, this is a great time to scrutinize your entire auto loan portfolio, not just a bottom line target. Take a look at the exposure you've got from loans coming to term in the next twelve months. Formulate a strategy to reach these members in case they're thinking of trading, or want to use the equity in their vehicle for another purpose. 

While you're investigating, learn the health of your auto loan portfolio and the quality of your VIN data. Having this information helps you recognize the exposure your credit union has in potential loan turnover and loss. Millions of dollars in auto loans could walk out of your door to a bank or dealership.   

And you'll be thinking those loans were here and now gone.

Is your credit union doing any of these things to hang on to its auto loans? Share with us. We're always interested in learning.

Pinpoint Direct Marketing exclusively serves the U.S. credit union market. We provide excellent, turnkey or a' la carte creative services at a great value. Click to learn more about us.