Associated Credit Union ($1.3B, Norcross, GA) has created a dominant niche for itself in the local lending market by using radio show appearances and other promotions to educate members and the broader community about the auto loan rate they deserve. According to Search & Analyze data on CreditUnions.com, Associated posted an 11.71% overall loan growth rate as of Sept. 30, 2013, as well as an impressive auto loan penetration of 42.40%. This is well above the auto loan penetration national average of 16.47 % and state average of 25.92%.
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The credit union works with approximately 100 dealers through its indirect lending program but generates as much, or more, business on the direct side because of its consumer education outreach.
“We constantly tell members to get pre-approved because you need to know the rate you deserve before you shop,” says Greg Connor, executive vice president at Associated Credit Union. The credit union uses a mix of paid spokespersons and its own lending staff to discuss car buying during a popular weekly radio auto show, so listeners witness firsthand Associated’s intention to benefit the consumer. “We also emphasize that if you financed your car through the dealership, you probably didn’t get the best rate you could qualify for and encourage people to call us to refinance.”
In addition to its regular presence on the radio show, ACU also sponsors a live car-buying seminar at least once a year that is broadcast over the airwaves to a wide audience.
“Atlanta is a huge driving city, and no one has a commute that is less than 30 minutes,” Connor says. “They are going to listen to the radio. We’re on a wide spectrum of stations including rock, country, and Christian — not just one genre."
ACU’s focus on education in conjunction with its auto recapture mailer that goes out monthly to members who took out loans elsewhere helps members understand the potential savings and refinance with the credit union without the fear of judgment. Associated highlights “Auto Refinance” as a separate product on its website and clearly shows members the benefits of refinancing higher rate loans. By encouraging members to refinance and listing the product and potential savings prominently, Associated Credit Union helps members feel more comfortable about coming back even after they’ve taken a loan from another lender.
For members who need an extra nudge, the credit union offers a 90-day, no payments promotion for both auto refinances and new auto loans during the holidays and throughout the year.
“This promotion is popular, especially over the summer,” Connor says. “Members can refinance and save on their interest rate, and if they do it in June they can also use their excess funds to pay for that vacation because they won’t have to make their regular car payment.”
According to Connor, not all members will refinance even with a great promotion as an extra incentive, but they will think about the credit union the next time they purchase a vehicle.
For those with less than stellar credit scores, ACU also offers a rate rewards program that reduces the loan rate if the member makes payments on time. Members receive a 100-basis-point reduction after the first year of on-time payments and an additional 100-basis-point reduction for each of the next two years if they continue making on-time payments.
“This program is beneficial to both the members and the credit union by rewarding on-time payments,” Connor says. “We aren’t permanently forcing members who may have had a job loss or other issue to have a higher rate.”
The member’s monthly payments stay the same, but the interest rate drops as much as 300 basis points. That equates to a typical savings of $1,200-1,400 on a $20,000 loan.
Associated Credit Union is proving that it is possible to have both a relationship with dealers and a thriving direct loan business. In addition to its heavy radio presence, the credit union also uses Google Adwords.
“It would be hard not to know about us in the market,” Connor says. “However, our presence is not pushy. We focus on education and want you to know what you deserve.”
As credit unions look ahead to 2014 and consider strategies to help grow auto lending, these closing remarks from Connor are a mantra to keep in mind: “We try to make sure that in everything we do, there is a benefit to the member at every juncture. If you do that you’re going to get your share.”