Pumping up Loan Volume

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Free gas.

It's an offer that has piqued the interest of many members at Fiberglas Federal Credit Union here, tired of paying as much as $3.09 per gallon.

The CU, in conjunction with one of its SEGs, Englefield Oil, which owns a chain of gas stations and convenience stores throughout Ohio, launched the month-long promotion in September to help ease some of the gas pains members are feeling, said Shani Smith, VP of Marketing.

"In light of the recent gas price hikes, we wanted to do something nice for our members," Smith said. The catch is that members have to take out a new car loan or refinance a car loan from another financial institution to qualify.

The clever offer that had members swarming into the credit union for details as soon as it was announced is among many promotions across the nation triggered by events of recent years-and weeks -that have impacted the price of gasoline.

Many are offering discounted loan rates on purchases of environmentally-friendly vehicles with one going so far as to give its members a chance to win one.

United Teletech Financial Credit Union, Tinton Falls, N.J., announced its discounted rates plus extra incentives that include a 90-day payment deferral and a $50 gas card.

Reducing Loan Rates

"Reducing loan rates for hybrid vehicles is a small way to make a difference in the quality of life in Monmouth, Ocean and Middlesex counties," said Leo R. Ardine, CEO of the $256-million UTFCU.

He said the promotion includes reminders that hybrid vehicle owners can take advantage of federal clean-fuel tax deductions available through 2006. Under current law, a one-time $2000 deduction can be made on hybrids purchased by Dec. 31, 2005.

"With the escalating price of gas, buying a fuel-efficient car not only makes a lot of sense, but it's good for the environment, as well," Ardine said. "As a responsible corporate neighbor, we believe it's important to do whatever we can to help make hybrids more affordable in our communities."

Columbia Credit Union in Vancouver, Wash., launched a year-long promotion in January that offers a chance for one lucky member to win a 2006 Ford Escape Hybrid. Members earn entries into the drawing by participating in such things as a website scavenger hunt, an educational seminar, or Member Appreciation Day. Members get one entry for each of the qualifying products and services they use during the promotional period.

"The more the member does at the credit union, the more ways they enter automatically to win," said Colleen Boccia, VP-marketing at Columbia CU.

She said the promotion stemmed from the CU's appreciation for the environment and understanding of its members financial needs.

"We are very aware of the interest in energy savings and trying to make the most of the dollars we have in our wallets," Boccia said, adding that the hope is that members will take advantage of the promotion by checking out the many products and services available to them, including e-statements, consumer loans, auto loans, home equity lines of credit or loans, home loans, IRAs, bill pay, CDs or Money Market accounts.

Energy FCU in Rockville, Md., offers its members a chance to "save on gas, save the environment and save 1% off new car loan rates" if they "go hybrid."

Promoting Hybrid Cars

"We've had an ongoing promotion with hybrid cars since 2003," said Valerie Murphy, director of marketing at Energy. She said it followed another environment-conscious promotion that offered discounts for solar-powered homes.

"Since the inception of hybrid cars, we've been offering a 1% discount off the car loan rate the member is approved for (Energy FCU has risk-based lending)."

And, while inquiries have been sporadic since the promotion's launch, Murphy said more members are expressing interest as the gas prices go up and the commuter traffic gets worse.

"There are benefits with the gas, the environment, the discount we give, the tax breaks and, around here, access to the HOV (high occupancy vehicle) lanes."

Gas Card Giveaways

Royal Oakland Community Credit Union in Royal Oak, Mich., sent out direct mail postcards urging members to "Fill Up On Savings" with its competitive loan rates. The lure, a $50 gas card.

Smith, of Fiberglas FCU, said her CU's gas card promotion was a hit the minute it launched.

"We've given away quite a few cards in the last few days," She said, explaining that qualifying members receive a gas card worth $100 to be used at participating gas stations.

In addition, they get 25 basis points off their loan rate if they sign up for automatic payments and no payments for two months.

Smith said costs for the promotion were split between Fiberglas FCU and Englefield Oil, a partner that also provides no surcharge ATMs at 57 BP gas stations and Duke and Duchess convenience shops in the state.

"We did a direct mail campaign, promoted through our SEG groups, and bought a newspaper ad," Smith said. "And, last Friday, I passed out fliers from the drive-through windows."

Fiberglas FCU has $90 million in assets and serves 16,000 members from its 126 SEGs.

Credit unions including Mennonite Financial FCU, Lancaster, Penn; Technicolor FCU, Burbank, Calif., and People's Alliance FCU, Hauppauge, N.Y., offer anywhere from 25 basis points to a full percentage point off the loan rate for purchases of hybrids.

"We're just simply discounting our regular new car rate by another one percent if the member buys a hybrid," said Larry Miller. "We haven't done very many, but we'd had a few."

He recalled three members taking advantage of the offer last year. Two purchased the Toyota Prius and one purchased a Honda Civic. Miller said Mennonite Financial's website also offers links to information about the advantages of buying hybrids.

Lisa Mitnick, manager of Marketing and Public Relations at People's Alliance, said her credit union has had no takers to its 25-basis point discounted loan rate launched in July, but not for lack of interest.

"Actually, there has been a high amount of interest in hybrids," she said. "Our members are just waiting on availability at the dealerships."

At Vista Credit Union, Orlando, Fla., the Clean Air Car Loan has been an ongoing offer for the last three years as part a philosophy shared by the CU and its sponsor, The Walt Disney Co.

"It was a credit union initiative that was and continues to be embraced by our sponsor, The Walt Disney Company, which has a long history of championing environmental programs," said Darcy Cormier, brand manager at Vista.

Vista members who purchase clean air vehicles through the CU are eligible for a quarter-point off the approved APR. Among the qualifying vehicles are solar, hybrid, electric and CNG-powered, she said.

Cormier was among the many CU officials that said recent increases in gas prices haven't triggered a surge in interest for hybrid vehicle loans.

"After doing a little research and informally polling my front line areas, surprisingly, we have not really had an increased interest in the clean air car loan in recent months," Cormier said. "It continues to be a 'once in awhile' request."

That's not the case at Permaculture Credit Union in Santa Fe, New Mexico, where the majority of its car loans are for alternative fuel vehicles. Not surprising for a CU founded in 2000 on the principles of permaculture, which promotes living in balance with the environment.

CEO Don Sarich said the FOM is association-based, requiring that members belong to a permaculture organization or believe in the ethics of permaculture. Members, who are sometimes asked to support their credit union with financial donations, in return, get discounted rates on loans for things they value, including environmentally friendly home improvements and vehicles.

"Some of our members live in the mountains and do need four-wheel drive vehicles," Sarich said. "So we don't discriminate. But, we can give people who are going above and beyond to protect the environment a discount."

For example, he said, the loan rate for any new or used car is 7.25% for a member with "A" credit. It's two-percentage opints less for all electric vehicles, 150 basis points less for vehicles such as the Toyota Prius and Honda Insight that get 45 miles or more to the gallon and 100 basis points less for vehicles like the Honda Civic hybrid that gets 35 miles or more to the gallon.

They're still not as low as competitor's rates, Sarich said, but PCU's members would rather pay a little more the CU that promotes environmental causes than give it to a dealership.

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