PHOENIX — For $1.6 billion Arizona State Credit Union, a poor economy for an extended period of time meant pent-up demand for auto loans — once it let its members know these loans were available.
Derek Longshore, VP of marketing, told Credit Union Journal because times were so tough, many people in the Grand Canyon State had been holding on to their cars for years.
"The economy had been very bad here in Arizona. Arizonans did not know where they stood, creditwise, so we took it upon ourselves to let them know it is an easy process to get an auto loan," he said.
AZSTCU went through the credit scores of its 130,000 members and was able to pre-approve many for an auto loan using internal criteria and guidelines it has developed through experience, according to Longshore. "We were able to pre-approve more than half of the members for at least some part of a loan, which speaks to the quality of our membership."
Once the pre-approvals were ready, Arizona State CU communicated the offers through a number of methods. Members could egister their preference for postal mail versus e-mail, and Longshore said selected members also saw a banner when they logged onto the CU's website.
Getting The Word Out At Branches
"When members came into our branches our associates let people know they were pre-approved," he added.
Because some consumers have been hesitant to take on more debt in an uncertain economy, AZSTCU introduced the ability to skip two payments throughout the life of the loan — automatically built into all auto loans.
Response rates have been "overwhelming," Longshore said, tracking roughly 4% to 5%. "This probably is because there was a lot of pent-up demand for vehicles," he said. While Longshore declined to state exactly how many loans were booked, he said the dollar amounts "are huge."
"We have seen millions of dollars worth of auto loans each quarter," he said. "The ROI on these programs is 800% or even more because we have great, loyal members who understand the nature of cooperative. We know our members, they trust us, so they responded."
Asked if there were any lessons learned — positive or negative — to be applied to future lending campaigns, Longshore quipped, "To keep doing it."
"Our members are responding favorably. My job is to segment to understand what members' needs are and make offers that are even more specific to what they need. There really were not any negative lessons, because the money we make circles back into the community."
In the wake of this success, Arizona State CU "definitely" will continue the pre-approved auto lending program as long as members are receptive to it, according to Longshore.
He said the next step is to find methods to make the process even simpler, including putting a check in members' hands that they can give to the dealer. "We want to make the car-buying process easier," Longshore said. "We also can do this for mortgages or home equity loans. We want to reward people who have been members for many years, and perhaps overlook a blemish here or a blemish there."
