The Rapture of an Auto Loan Recapture Program

An Auto Loan Recapture program is a safe way of increasing a credit union's loan portfolio and membership. This past Thursday, two credit unions shared their success with this program in Callahan's Quarterly Auto Lending Webinar.

 
 

Last Thursday, credit unions from across the country participated in a webinar on auto loan recapture programs. An auto loan recapture program is a monthly process where credit unions can identify creditworthy borrowers who have recently financed a vehicle with another financial institution. They can then market to these members and encourage them to re-finance their vehicle at the credit union.

Alliance Federal Credit Union (TX)

Galli Davis, VP of Lending at Alliance Federal Credit Union, began this program as an alternative to indirect lending. Alliance partners with SER Technology to receive a list of members who financed their vehicles at other financial institutions. They then sent pre-approved mailings to these members. Here were some of the highlights of the program:

  • Retrieved 90 new loans in the first 60 days after the mailing
  • Experienced immediate spike in other auto products, such as GAP insurance because they were replacing the dealers expensive products
  • From the members’ perspective, they re-financed with lower payments and were in some cases paying off their loan even earlier.

According to Galli, “Members came away thinking of the credit union staff as superheroes.”

Educational Employees Credit Union (TX)

Ana McQuirk, Community Development Officer at EECU, engaged in a similar strategy. Once mailings are sent to members, credit union staff will then place follow up calls to those who don’t respond. EECU is also active in cross-selling other products to members who choose to re-finance their auto loan with them. They’ve had a lot of success cross-selling other auto products but Ana also pointed out, “We’ve been surprised by the number of credit card loans we’ve generated from this program as well.”

Here are some measures of success that EECU shared regarding their program:

Total Membership Submitted

93,892

Total Number of Loans to Break Even (2004)

90

Total Number of Loans Made from 5/1/04 to 12/31/04

93

Total Auto Loan Recapture Production 5/1/04 to 12/31/04

$1,634,908

More information on successful auto lending strategies is available through our quarterly auto lending webinar series. For more information, click here.

 

 

 

 

April 11, 2005


Comments

 
 
 
  • An auto loan recapture program can be a little tricky to run if you also have an indirect program. However, vendors are developing ways to identify potential auto buyers before they finance their vehicle and offer them pre-approved financing options. Experian offers a new target-marketing tool that can help pick out which members of a credit union are looking to purchase a vehicle before they finance their vehicle and "drive" them to a dealer.
    Anonymous
     
     
     
  • credit unions beware!!! recapturing loans and cancelling "the dealerships expensive products" can be potentially damaging. Car dealerships pay close attention to chargebacks and they track where they come from. If your credit union has an indirect program, respect and appreciate the business dealerships are sending you. Usually it's thier customer first-then they become a member. Let's realize car dealerships are your customer and thier employees may even be one of your members. Heaven forbid!!
    Anonymous
     
     
     
  • The list of the members that had financed vehicles at other institutions is gathered from credit bureaus, such as Experian. - Joe James, Callahan & Associates
    Anonymous
     
     
     
  • We would like to know how they were able to get a list of the members that had financed vehicles at other institutions.
    Anonymous