Most credit unions started “life” as a SEG based institution. Many were designed to meet the banking needs specific businesses employees by financing loans, open savings accounts, and even transactional accounts through payroll deductions.
80% of all auto loans are financed through auto dealerships. The F&I (Finance and Insurance) department at the dealership is responsible for over 50% of the dealership’s total profit. The greater the interest rate charged and the higher number of add-on’s to the loan drive, the more profit the dealership receives. Based on data from the credit bureaus, we are seeing financed rates that range from 200 to 600 basis points higher than what most credit unions would charge for the same dollar loan, credit score, and term. It’s safe to say, if you financed your car at the dealership, you probably have a much higher interest rate than you should.
Assisting the Underserved Member
Over the years, credit unions have grown organically through mergers. More recently there’s been a change to address the banking needs of underserved households. By working with the NCUA, credit unions have been able to form community charters. This classification is certified proof that the credit union is reaching out to this underserved community and assisting them with their banking needs.
There are large numbers of potential members residing in these community charters that could save a substantial amount if they were to refinance with most credit unions. Stellar Auto Loan applicants that fund loans with our partnering credit unions are saving over $80 each month, and more than $4,000 over the life of the loan.
Our contingency based programs uses credit bureau data to find consumers that are paying substantially higher interest rates than what the credit union charges. We show the households their potential savings and do so with NO MARKETING COSTS charged to the credit union. Stellar pays for 100% of the marketing and the credit union only pays a small success fee for loans funded via Stellar’s efforts.
The mailing list is tangible evidence to the NCUA that the credit union is reaching out to those in need and do so in a very responsible way. These new members that have new loans become real members, opening additional services and products, unlike most indirect loan members.
We would be happy to help your institution determine the numbers of households within your charter footprint that could save $50 or more if they were to refinance with you. Please fill out our FREE Refi Market Analysis to learn more.