Credit Unions have been helping members finance vehicles since they were first established. Over many decades CUs have grown their indirect auto loan portfolio with aggressive rates and technological upgrades through dealership financing relationships.
Unfortunately, when all is said and done, profit margins have begun to shrink. When all costs are accounted for some dealership relationships actually generate negative margins. We know of a well-run $1.6 billion-dollar credit union who only reported a 93 basis point interest margin on their indirect auto loan portfolio. This has been an acceptable piece of business for far too long. Many institutions regardless of extremely low-interest margins and high member churn continue to rely on indirect loans. This simply doesn’t need to be the case!
Over the past several years of meeting with clients and prospects we’ve consistently heard the negative aspects of indirect loans. Some of them have significantly reduced their reliance on indirect loans or completely eliminated them from their portfolio. We believe the best approach is a well-balanced auto loan portfolio with a new approach to indirect loans. Consider this: if you were going to start a new business would you focus on a low margin, high customer churn business? Of course not! So why do so many CUs accept that premise from their indirect auto loan portfolio?
Consider taking what has become a wholesale product play (Indirect Auto Loans) and use it as a relationship starter to create eventual PFI relationships. That’s exactly what we have accomplished by developing The Stellar Indirect Tool Kit℠.
This program is heavily dependent on data analysis as well as easy to use turn-key marketing templates that makes execution on your end a breeze. As with all of the Stellar products, price is a key driver in the development of our products and solutions. In many cases we will rebate the entire cost of the first and most important component of the program, the front-end data analytics.
So, take into consideration the significant change in attitude and approach regarding indirect auto loans. I’m sure you agree that low margins combined with high customer churn is not sustainable. That’s the state of most indirect auto loan portfolios today. It doesn’t need to stay that way. The Stellar Indirect Tool Kit℠ is the direct solution to your indirect problem.
For more information on the data analytics and marketing components of The Indirect Tool Kit℠, read the articles below!
Indirect Tool Kit Analysis
Analysis is a key component of The Stellar Indirect Tool Kit℠ — it’s what allows us to help you get the most from your marketing dollars to maximize the transformation of indirect loans into PFI relationships. To facilitate this, Stellar uses your current and historical account data to segment…
Upon completion of the analysis phase of the Tool Kit you will now have the necessary knowledge to customize your marketing efforts. Keep in mind, the extensive data analysis was designed to answer the who, what, where, when, and why questions that create the templates for your marketing initiatives.…