Background:
This credit union (CU) is located in the Midwest and has an asset size of roughly $1.3B with 120,000 plus members. The CU has a community charter footprint with a potential membership of over several million households. The CU rates for A, B, C, D, & E paper of 4.64%, 5.34%, 7.69%, 9.44% and 12.19% for 60-month loans respectively (with a 590 credit score floor).
Stellar Auto Loans’ Proposal:
Our clients pay no out of pocket marketing costs. All incentives, credit bureau lists, mail, postage, telemarketing expenditures, website, etc. are paid by Stellar Auto Loans, thus taking all costly risks from our clients. We collect a 2.5% success fee from the funded loans that match back to the marketed consumers. A $39 application fee is assessed on all applications, which is waived when the loan is funded.
Approach:
Stellar’s unique auto loan recapture program uses data mining of credit bureau consumer information to find households that are paying a substantially higher interest rate on their auto loan than what our client would charge for the same credit score. Stellar then scrubs the potential list to remove those prospects that will not meet the FI’s credit policies (i.e., late payments, bankruptcies, number of open loans, etc.). Prospects are ranked by best responders as well as profitability.
The prospect is mailed a prequalified offer letter, which shows the monthly savings for that consumer, if they were to refinance with the credit union. The direct mail offer
is supported by outbound calls, a custom microsite with application, reminder letters, digital marketing and after hours inbound call service. Applications are completed and sent to the FI for approval and loan closure.
Implementation:
Using the CU’s standard rates, the “Stellar Auto Loans” program targeted non-member households that were eligible to become members. Potential members mailed were spread across all paper grades fairly evenly.
Results:
- 2019’s mailings resulted in $18,123.258 in new, booked loans.
- Members saved an average of $95.56 per month on their loans.
- The average booked loan term was 57 months.
- $5,447 savings per household over the remaining life of the loan.
- An average blended interest rate for all funded loans was 9.03%.
ROI:
- Estimated interest income for first 30 months: $4,093,246
- Estimated DDA (Demand Deposit Account) income for 30 months: $59,500
- Estimated 30-month non-interest income (GAP, MBI, etc.): $278,525
- Total estimated income: $4,431,271
- Total estimated ROI: 325%
Grow new auto loans and relationships by contacting Stellar Auto Loans
Call 866-347-5632 | Email info@thestellarfinancialgroup.com