GTE FCU Finds AAA Relationship Driving Loans

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When GTE FCU recruited AAA of the South as a SEG, it got more than just a new group to market its services to. It also found a willing partner in the auto loan business that has helped the credit union increase its loan volume at a time when most CUs were struggling to compete for auto loans.

"It turned out they had some other interests, (in addition to finding a credit union)" said Neil Timson, SVP-lending at the $1.3-billion CU.

In fact, it was like a business development officer's dream. "Soon after we signed them as a SEG they came and had a strategic meeting to see what we could do jointly. We have a strategic meeting with them once a year now to look into other avenues for partnership."

On the auto loan side, AAA was looking for a lender that could offer loan services to its members online. "They offer an auto adviser, and auto buyer," Timson noted. "I think they liked best that we have a web-based product that's automated from start to finish."

The program is much like an indirect lending program with an auto dealer. When a member of AAA of the South uses the group's auto adviser and buyer resources, AAA offers help finding the financing for the car, in much the same way a dealer will find financing for a car buyer.

In most cases, members are using AAA's website for these resources, and GTE's loan application is right there waiting for them. The program is available even if the prospective borrower is not already a member of the credit union. AAA also has a call center as part of the program.

Join AAA, Join The CU

As AAA members, they're eligible to become members of the CU Savers Club, which takes just $10 to join.

At that point they become eligible to join the credit union itself and get the auto loan, Timson explained.

Just as in a regular indirect loan program, GTE pays AAA for each deal the organization successfully refers to the credit union. But for as much as the program may look like the same kind of indirect program a credit union might have with an auto dealer, there is one important difference: the quality of the new members being referred.

"Their members tend to be very good quality," Timson related. "They're usually much better than the people you get off the street like at a dealer."

Indeed, developing this program for AAA of the South has resulted in $59 million in new auto loans through November 2002.

"I'd say we average about $2 million to $6 million a month," Timson told The Credit Union Journal.

The added bonus: AAA does all the marketing.

And the opportunities for such strategic partnership don't end with the auto lending program. AAA of the South is one of the largest retailers of Samsonite luggage as well as one of the largest travel agencies in the area, and the two organizations saw potential there, too.

GTE and AAA have done a Samsonite luggage sale as well as several travel promotions.

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