Credit Unions have helped members finance vehicles since the first credit union was established. Over many decades, CU’s have grown their indirect auto loan portfolio by leaps and bounds, with aggressive rates and technology upgrades through dealership financing relationships.
Unfortunately, when all is said and done, margins have begun to shrink, and with some dealership relationships actually generating negative margins when all costs are accounted. One well run $1.6BB credit union reports a .7% margin.
It is extremely important to balance this segment of the vehicle loan portfolio with direct relationships. Direct relationships are far more profitable. Interest rates are not discounted as heavily as with indirect loans. The life of the loan is typically longer than indirect loans. Non-interest income is a huge additional income source that dealerships do not share with most Financial Institutions. Our clients are averaging between $531 to $822 per loan via cross-selling.
The national average of secondary relationships is less than 10% for members compared to over a 30% with direct relationships we see from our credit union partners. (Stellar Auto Loan data)
The key is to find more direct relationships, not only with current members, but potential members that reside in your charter footprint.
Stellar Auto Loans’ success fee, contingency based marketing approach targets potential members that meet your credit criteria and have a high likelihood of being approved for refinancing. We help our credit union partners capture the loans their indirect programs miss, and generate new, extremely profitable members.
Please use the button below to see what potentially can be generated within your market, based on your rates, potential members that can save $70 or more a month on their current auto loan if they were to refinance with your organization.
For more information contact George Monnier at george.monnier@thestellarfinancialgroup.com or call 402-438-3242 ext. 110.
