Huntington Bancshares, already an active auto lender, is mass-mailing plastic cards offering customers preapproved car loans.

The cards, which are good for six months from the date of receipt, activate loans that range from $5,000 to $50,000, with annual interest rates of between 8.5% and 9.25% for new cars, and higher rates for used cars.

Charles Roscow, product and risk manager for indirect lending, said he believes customers will be less likely to throw away the cards than a letter offering a preapproved credit line.

Columbus, Ohio-based Huntington, which has $20 billion in assets, hopes for a 2% response rate and plans mailings every six months.

The campaign represents an important strategy for banks such as Huntington, which have identified auto lending as a significant piece of business in an increasingly competitive market. Auto-related loans make up $4 billion, or 33%, of Huntington's total loan portfolio.

With intense competition in credit card and mortgage businesses, "auto is probably the only area that's a steady and reliable source of income for banks," Mr. Roscow said.

Some 84,000 cards are being sent to existing Huntington customers in Indiana, Kentucky, Michigan, Ohio, and Pennsylvania who have nearly paid off their present car loans or are nearing the end of their car leases.

The idea of using a plastic card was spawned after Huntington held a focus group.

Mr. Roscow said his company decided to approach existing customers with good credit to try to keep them. "We spend a lot of effort trying to attract new customers without paying attention to the one's we've already got," he said.

Lehman Brothers analyst Michael Mayo said Huntington is one of the few banks that has stayed in the auto lending business regardless of economic downturns. "This is a long-standing area of expertise for them," he said. "They have a greater percentage of car loans than almost any other bank their size."

Mr. Mayo said Huntington has done a good job in the past of keeping losses to a minimum. Net loan losses from auto lending represented 0.39% of total loans at yearend 1995.

Mr. Roscow said Huntington is a conservative underwriter of car loans, rejecting about 55% of its applicants. He said that since Huntington is soliciting only existing customers with good credit records, there's no great financial risk associated with the promotion.

Still, credit quality has been a concern in the banking industry. 'When you start hearing mass mailing, you have to keep an eye on the situation," Mr. Mayo said. "But this is a core business for them for more than 30 years, and they've had strong asset quality."

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