Credit unions have found that competing against car manufacturers’ 0% financing and keeping auto dealers from switching their members’ pre-approved loans to other financing a sizable challenge, but well worth the effort if successful.
Because autos are the bread and butter of CU loan portfolios, many credit unions have rethought their strategies and adopted new methods of capturing loans. Never has the competition been as fierce. Because University of Tennessee FCU Knoxville, (<ahref=”http://www.utfcu.org/ASP/home.asp”>www.utfcu.org) vice president of marketing Katy Jett found that members with pre-approved loans were going into dealerships with CU checks and coming out with dealer financing, she and loan services manager Myra Hamilton took action. Thedealers were stealing our loans to make that $150, said Jett. (UT FCU’s total loan portfolio is $57 million, of which $38 million is in autos. Total assets are pushing the $100 million mark, members number 21,000). The CU first respondedby giving an incentive to loan officers, but it didn’t make a real dent, so Jett and Hamilton came up with a better idea. We placed all our loan officers through a three month training program and turned them into auto loan specialists,she said. The program is called the Certified Auto Specialist Program.
UT FCU used a former dealership salesman whose company provides the CU with extended warranty programs to teach dealer sales techniques and then stocked a library with auto reference materials.
He gave the dealer’s point-of-view and showed us the techniques they use, Jett said. For example, when a married couple come in, they always talk to the man, she said, explaining the pitch used when selling an extended warrantyor mechanical breakdown insurance. They appeal to the husband wanting to protect the wife from being stranded late at night.
Besides teaching CU specialists how to prepare and counter various switch techniques, the CU is preparing a Quick Fact Sheet brochure to give to members that highlights car buying tips. Hamilton is also ready to deal with refinancing the dealsthat still get away, and the CU calls each member personally to inquire about the transaction. The CU’s 5.5% rate for 60-months and the Easy Rider $35,000 pre-approval program is now making inroads against captive financing, said Jett.
The CU sent out a 3,500 direct mail campaign two weeks ago that is starting to pick up speed too. Six just came in yesterday, said Jett, and three will cover the cost of the mailing itself.