New Strategies for Growing Membership and Loans: Auto Refinancing and Recapturing

May 3, 2013

Credit unions accounted for 18 percent of all new auto loans last year. While this market share is nothing to sneeze at, it also shows room for growth. Typically, when credit unions think of car loans, they consider two options: their existing members with direct loans or dealer financing with indirect loans. However, there are two more options that can grow your membership and car loan portfolio: refinanced and recaptured loans.

What’s the difference? In both cases an existing car loan is transferred to the credit union. A refinanced loan involves refinancing a car loan for a nonmember. A recaptured loan is when you refinance a car loan from another financial institution for an existing member.

Why is there always a market to refinance auto loans? While today’s low rate environment makes refinancing a budget-friendly option for consumers, the attraction to refinancing exists in any rate market because:

  • Consumers who didn’t get the rate they deserved at the point of sale
  • Consumers have improved their credit since taking out the loan and now qualify for a better rate
  • Consumers want to change the repayment terms of the loan

Why are these loans attractive to credit unions? Credit unions have the opportunity to rebalance their car loan portfolio because when they refinance and recapture loans, they are only selecting seasoned, performing loans. In the podcast you’ll hear about a credit union that chose to stop indirect financing in favor of refinancing and recapturing loans.

How can a credit union’s membership grow? RateGenius uses a national marketing strategy to generate applications from the general public for refinanced loans. These applications are matched to a credit union’s approval and field of membership guidelines—each new loan equals a new member. For recapturing loans from existing members, the credit union strengthens its relationship with that member by offering more attractive loan terms, whether it’s rate and/or repayment period.

Chris Brown, CEO at rateGenius, explains in this podcast why credit unions of all sizes should start refinancing and recapturing auto loans and provides tips for getting started. Chris has more than 30 years of experience in all facets of the automobile industry.

Allied Solutions is the NAFCU Services Preferred Partner for auto refinance loan generation and production, offering the rateGenius solution.