Arlington Community Federal Credit Union’s ($191.3M, Arlington, VA) innovative program to educate teens about the car buying process is helping boost the credit union’s auto loan portfolio.
More than $49.5 million of Arlington Community FCU’s $135.8 million loan portfolio was auto loans as of the fourth quarter 2011, according to Callahan & Associates’ Peer-to-Peer data. This year, the credit union has shifted the focus of its seminars from a detailed look at financing options to helping the students save and prepare financially for car buying, says the credit union’s business development officer, Nyambo Anuluoha.
The credit union has three in-school branches but is aiming to target all high schools in the county to offer its financial literacy seminar, in which it partners with Enterprise Rent-A-Car, which sells its used vehicles, to educate teens on car buying so they can see a vehicle and ask questions about financing, car options, and vehicle maintenance. Seminars offer tips on how to buy a car and what to look for in pricing and how to weight their wants and needs. The credit union then has a conversation with the students about savings.
“That’s really important especially in the downturn in the economy,” Anuluoha says. “We run down the host of different things we can do to help them as a credit union, setting up savings accounts and starting that conversation.”
Students, ages 13 to 18, in business finance classes learn that getting a car means getting a job, saving cash and getting financed in the interactive sessions. For many students, it’s their first conversation on savings. And while Arlington Community FCU is primarily aiming to foster a relationship with students so that they will turn to the credit union when they want to buy a car, it’s found that some students are already ready to buy.
“The next conversation turns into a conversation about their future, so it’s really a win-win,” Anuluoha says. In its three in-school branches, the credit union offers student accounts in which students can put aside money every week and at the end of the year they can see the rewards of their savings efforts, which can be used toward buying a car.
Like many credit unions, Arlington Community FCU is trying to help teens establish credit, so they may better qualify for lower rates on car loans. It educates the high school students on the value of credit scores and how to keep them higher. Credit score can be the single biggest hurdle for teen car buyers. Teens are often at a disadvantage with their short credit histories and lack of a stable income.
Arlington Community FCU’s target audience has long been the younger member. Seeing a need to educate students about the car buying process, it held a series of eight financial education seminars as part of National Credit Union Youth Week. Those sessions focused on vehicle researching, understanding CARFAX reports, questioning the dealer, negotiating pricings and conducting online research. This year, the topics are similar, but the format has changed to a traveling venue, going to the students’ classrooms instead of asking the students to the credit union.
“We are really hitting teens around the savings conversation and how that relates to buying a car,” Anuluoha says.