$50 Loan Offer 'Sweet Little Promo'

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Getting members to refinance their auto loans this year has not been as easy as waving a good rate in their direction. So, why not wave some money, instead?

That's exactly what Georgia Federal Credit Union did to lure $6-million away from its competitors.

"Can we give you $50?" was the question asked of members who had financed their 1998-2003 model vehicles elsewhere. During the four-month campaign from February through May, 326 people responded.

"As the rates get lower, what's the real incentive to refinance?" asked Kim Wall, VP, Marketing at GFCU in Atlanta. "It's hard to get people to move because there are a lot of good rates out there."

When GFCU President Warren Butler said he's be willing to "pay members to move their loans," the campaign created in-house was off and running.

Within a week, postcards were fired off to select members who didn't have loans with GFCU. By the month's end, checking statements included inserts. The offer not only included $50 to be deposited in the member's share account upon closing of the loan, it dropped their current rate by two percentage points, or as low as 4.95% APR, and matched the terms.

Wall said the credit union has been running seasonal promotions-typically June and July (and often extended through August)-to try and recapture loans lost during the height of the "elusive" 0% financing offers by the manufacturers' financing units. The postcard mailings included catchy slogans such as "It's not too late for a better rate," and "Swap your loan and we'll drop your rate."

"This year, we wanted to jump start our lending activity in the first quarter," she said. The offer with its own slogan, "When we grant your loan, you can take Grant home" has also been promoted via e-mail advertisements, a newsletter article, a website feature and cross-selling by employees.

"The cost of those $50 incentives was $16,300," she said. "However, if you consider that GFCU didn't waive its regular $20 application fee on these loans, the net cost was really $30 per loan, or a total of $9,780."

Well worth it, Wall said, considering GFCU is a risk-based lender and the majority of the loans didn't book for the minimum rate of 4.95% APR.

"It's been a sweet little promo," she said, adding that it will be extended for as long as the CFO gives the OK.

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