A car is one of the most expensive purchases in a consumer's life, which is usually accompanied by a large amount of debt from auto loans. In 2021, auto loans made up nearly 18% of total consumer debt for 18 to 29-year-olds, 10% for 30 to 39-year-olds, and 9% for 40 to 69-year-olds. So, with a vast majority of the population taking out loans for their cars, why isn't your credit union getting more auto loans?
One explanation is how many people purchase vehicles through what's often called, "payment shopping." In this case, people select financing based on the monthly payment rather than the term length, associated fees, and interest rates, which may seem like a good deal, but costs much more down the road. The good news is that even if your target audience financed an auto loan somewhere else, you can still reach them with an effective auto loan recapture program.
What Makes Auto Loan Recapture Work?
There are a few things your credit union can do to successfully recapture auto loans:
1. Highlight Low Monthly Payments
As we previously mentioned, people usually tend to focus on the monthly payment rather than the terms and interest rates. Although you understand that a lower APR is more beneficial in the long run (and some of them may too), they will ultimately be thinking about the recurring payments because that's the amount leaving their bank account. As a result, your credit union should use this way of thinking to your advantage by drawing attention to the low monthly payments you can offer.
2. Show Them Their New Payment Using Prescreened Data
One of the best ways to recapture an auto loan is if you're able to show your credit union member exactly how much they'll be saving. You can do this by using a prescreened list and variable data to illustrate the differences between the monthly payments/total loan amounts they paid before and what they'll now be paying with you.
3. Ensure an Easy Transition
No one enjoys going through a complicated, time-consuming process at any point during their day, much less when dealing with their auto loan. So, to ensure a great member experience, it's important that you make it easy for members to apply or accept pre-approved loan offers. The truth is, if it seems difficult, people will quickly lose interest. Provide convenient response options by either creating a landing page where they can click to apply or mailing the application directly to them. And don't forget to follow up using multiple channels, including phone and email!
As a credit union, you have plenty of options to help increase your lending and benefit from the ever-growing auto loan market. By highlighting low monthly payments, showing the savings, and ensuring an easy and convenient transition, you'll be sure to see incredible results.
With FLEX, credit unions can benefit from our integration with SavvyMoney, which is a banking platform that allows for targeted lending campaigns, pre-qualified loan offers, loan opportunity identification, and more. If you're ready to boost member engagement, increase credit, and watch the auto loans roll in, download our eGuide today!