Getting Even With Dealers Who Steal Loans

With a pitch-perfect message, Campus USA woos back borrowers to recapture lost business.


It's the bane of every credit union — losing a pre-approved borrower, sometimes with the draft already in hand, to a dealer who persuades the member to finance the car elsewhere. That's the kind of auto loan that Campus USA ($1.1B, Gainesville, FL) steadfastly works to recapture. "Although we have great relationships with dealers, we want to keep that loan on our books," says Tarin Acaron, the credit union’s marketing director.

Campus's efforts to recapture loans began in 2003 as part of a broader marketing campaign of phone calls and mailings to members. Today, recapturing loans dominates the program and serves as its greatest achievement. In 2012, the credit union's strategy for recapturing auto loans had a 2% response rate, successfully winning back not only pre-approved borrowers who defected to another lender but also members who never considered asking the credit union for financing.

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By itself, a 2% success rate may not sound like much, but recaptured loans helped propel the credit union's 5.14% growth in auto lending last year, a healthy increase that hasn't come at the expense of greater risk. Although higher than the national average of 1.15%, Campus's 1.51% delinquency rate is considerably lower than Florida's 2.19% average rate.

In addition, because many of the loans are recaptured months or even weeks after a new car was purchased, they often have high balances. Campus, however, classifies the loans as used auto lending because the car was retitled when the loan was transferred.

Payback Time

The credit union's strategy to recapture loans relies as much on solid research as it does on its staff's canny people skills. "It starts with finding good leads," says Acaron, whose loan recapture staff consists of two full-time relationship specialists. They pore over lists of borrowers with recent car loans that Campus purchases from a variety of sources, including Equifax, the Credit Union National Association, and their Marketing Customer Information File (MCIF) system.

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Generated by Callahan & Associates' Peer-to-Peer Software.

Although Campus mails its refinancing offers to all members who have car loans at other financial institutions, phone calls are reserved for only those people that Campus has a shot at enticing with a better rate. Relationship specialist Rachael Smith crunches the numbers first, rolling any fees into the loan, to see if the member will save money before she calls anyone out of the blue.

"Rate is the biggest factor," with the promotional rates through the dealer's own financing often the toughest to beat, Smith says. Acaron agrees: "If they took advantage of the dealer's 0% rate, there's not a lot we can do."

But if the dealer's rate is less than stellar, Campus has an opportunity to go after those loans it thought it had in the bag before the dealer intervened. "If we see that some dealers are taking our members instead of honoring our draft, we will be very aggressive when we go to that member to recapture the loan," Acaron says. Campus will do everything possible to beat the rate while simultaneously sending a pointed message to the dealer that it shouldn't mess with the credit union's members.

Revenge is as simple as it is sweet. "We want the dealer to have to pay back whatever incentive it received" when it steered the loan to another lender, Acaron says.

A Pitch-Perfect Delivery

Aggressive interest rates may be the bait, but an easy, convenient refinancing process is the hook that Campus uses to recapture the loan. The credit union handles all the paperwork, burdening members only with the task of signing the documents in person. "Eventually, they won't even have to come to the credit union to sign them," Smith says. Campus is in the process of adopting technology that will make electronic signatures possible and plans to have the program running within the next six months.

But it's Campus's pitch-perfect delivery that really wins the day. After another lender whisks away a pre-approved member at the last minute, Campus has the perfect excuse to call and find out what happened — and there's no whiff of the rejected suitor in its tone. Instead, representatives project a note of concerned interest. We want them to know that "we are looking out for the member, that we were watching the loan, and that we want them to have the best deal," Acaron says.

That's a trickier conversation to have when a representative calls a member who never asked Campus for the loan in the first place. The last thing the credit union wants is to come across as an institution that practices stalker-like oversight of its members. "We don't call and say, ‘Hi, Mr. Smith, we see you financed a vehicle in August,' because that creeps people out," Acaron says.

To avoid spooking the member, representatives make the phone call seem routine, just another special deal the credit union currently offers and wants people to know about. That the special rate also happens to be for auto loans seems nothing more than a timely coincidence, and the members never know that they are just the latest targets in a concerted effort to recapture business.




April 3, 2013


  • Does the credit union have an indirect lending program? Wouldn't having an indirect program give the CU at least an even chance of capturing the loan in the first place?
    Will McGregor
  • Great and timely article. Another good reson to partner with Enterprise!
    K Quinn
  • VERY timely article. This just happened to my mother last week -- she insisted on CU financing, and the dealer told her the CU turned her down and signed her up a bank loan. She called me, somewhat upset about the CU, and I asked her to call the indirect lending manager at the CU. Sure enough, the dealer had simply lied about the whole thing. The CU took care of the situation with the dealer and got the loan back a few days later. Great reminder that it's just good business to hold your partners accountable and go to bat for your members.
    Brian Wringer