Key contributions provided by Auto Approve
Refinance Partnerships and Expanded Portfolios
More than ever before, auto refinance companies are presenting unique solutions for lead generation to financial institutions.
Through refinancing partnerships, financial institutions can attract new consumers, which in turn leads to new loan opportunities.
An added bonus?
Refinancing companies perform these services on behalf of financial institutions, which means there is minimal leg work to be done by the financial institutions themselves - saving you money on expenses in a variety of areas as new loans are added to the books.
In order for your financial institution to successfully compete in the current lending landscape of expanded auto refinance portfolios, consider a broader customer base by exploring unique, non-traditional lending options.
Attract Millennials through Product Innovation
Today’s top lenders have experienced a major momentum shift towards expanding opportunities towards “modern” or near-prime borrowers.
However, consumers with near-prime credit - typically defined as having a credit score approximately 580 to 700, depending on the financial institution you ask - oftentimes get a bad reputation.
Why do near-prime consumers get a bad rap?
Quite possibly because they are often made up of millennials with little to no credit history. However, these millennials are critical to the auto refinance market and should not be passed over.
Millennials focus on monthly payments and loan terms, making them much easier to attract. Since they are payment shoppers – they have no problem with an 84-month term on an auto loan – as long as their monthly payment is lower. In fact most prefer it.[1]
Additionally, this demographic is very tech savvy and will be likely be doing much of their research about you and your loans online. In fact, 97% of millennials use the internet.[2] Therefore, it is important to position your financial institution’s website and social media in such a way that is up-to-date and interactive. Instill through technology that your financial institution is the best to work with while offering competitive rates.
Consumers are more likely to choose a product or service if they are referred by a current customer. Consider implementing a referral incentive program for your current consumer base.
This generation loves experiences. Some ideas would include concert and sporting event ticket giveaways or travel incentives in your offerings.
You never know, the consumer who wins Bruno Mars tickets in your March referral prize drawing, could have a friend with money to spend on an auto loan.
Mitigate Risk
Of course, investing in refinancing partnerships and tapping into non-traditional lending markets are both excellent strategies for growing an auto lending portfolio, but doing so does not come without risk.
So how can you remain protected?
There are studies that show auto refinance has a proven track record for low delinquency. Partnering with an organization that has both strong collections services and underwriters will help to ensure you are protecting your assets while expanding your loans to new markets.
Consider partnering with an auto refinance shop that offers a full recourse option on the loan. Such partners are likely to treat your money as if it were their own, which provides additional assurance that all parties involved are working towards the same goal of marketing a safely developed, successfully executed loan program.
Contact us or visit the auto refinance program page to learn more about Auto Approve's refinancing solutions.
[1] Mast, Trevor. “The Near Prime Gold Mine.” Payments Leader, FIS Payments Leader, 31 Oct. 2017, www.paymentsleader.com/the-near-prime-gold-mine/.
[2] Jiang, Jingjing. “Millennials Stand out for Their Technology Use.” Pew Research Center, 2 May 2018, www.pewresearch.org/fact-tank/2018/05/02/millennials-stand-out-for-their-technology-use-but-older-generations-also-embrace-digital-life/.