Why and How to Target Auto Loan Refinancing in Today's Market

There is potential in serving the near-prime markets.

Sarah. Cooke, Tuesday, May 28


A recent Edmunds Report predicts 16.9 Million new auto sales in 2019. While this number is slightly lower than the 2018 sales figure of 17.2M, the Edmunds report projects an average purchase price of more than $37,000, a nearly 9% increase over three years. Add to this extended loan terms and rising interest rates, there are nearly $1.2 trillion in auto loans currently outstanding, according to a report from Experian . Consumers need help.

Credit unions hold nearly 30% of these notes worth $346 billion but can certainly capture more with a discerning analysis of the data and making wise choices that benefit all members and their communities. Targeting messaging on auto loan refinance options is a great opportunity for credit unions interested in serving the near-prime market on multiple fronts.


Priced accordingly, prime and near-prime auto loan refinancings make great sense for credit unions. According to Value Penguin , the average interest rate consumers with a 620 credit score or better across all financial institutions is nearly 10% APR, while a customer with a credit score of 700 can expect a rate of nearly 5%. With the average APR on credit union loans coming in at 3% and 5% for new and used vehicles, respectively, credit unions with the right messaging and targeting can lure borrowers at their competitors into better options for the member, while also serving your credit union’s interest income needs. Credit unions exist to serve their members, and, in part, that means those who are credit challenged but a smart risk as well. We have a great partner in Open Lending that can help discern alternative data points and put more members on the path to financial success.  

Putting higher-rate loans on the books for the credit unions but members into lower rate loans just makes sense. Keep in mind with your messaging, interest rates can be tricky for consumers to visualize, so it’s smart to emphasize to them their current payment and what your credit union is offering or simply stating your credit union will save the member $100 per month (or whatever the amount is) on their car payment. Personalized data is better, but even showing the averages can help!  

These members will recognize your credit union’s value, and with a little nudging, may bring more of their accounts to you because your credit union was there to help. Looking further into the Experian data, we also find that the percentage of nonprime loans are falling as an overall percentage of new originations (18.5% vs 18.96% for the prior year). Even with a slight decrease in these loan types, overall, accounts with past due balances have risen across the market. But not at credit unions! Credit union member loan delinquencies actually decreased over this same period according to CUNA . With the right data and messaging from companies, like Ser Tech, credit unions have a clear path to greater margins and market share as they help members, building trust and loyalty. Credit unions have increased their auto loan market share in recent years. We are counter-cyclical, so when others are not lending, credit unions are because we don’t have investors to serve. We serve the members! And many are going to need their credit unions to step up for them. Ser Tech can help you start now. Contact us today to learn more about Fetch Targeted Marketing, Flitter Credit Network and education, and ProAct.

Our products work hand in hand to help you identify and bring in the consumers and members you want, keep them educated about responsible credit handling with real FICO credit scores, and manage your overall portfolio risk.