NEW ORLEANS-Tired of losing member loans to local dealer financing, Cabrillo Credit Union has stepped into the used car business and is now doubling loan volume over 2011 projections.

Cabrillo created a "virtual dealership" on its website, launching the "Weekly Auto Deal" that each week features five different, attractive used cars at low prices.

VP of Marketing Anne Legg explained the strategy behind the virtual dealership is to keep members from wandering. "There are three entities to any car loan: the consumer, the dealer or third-party who owns the car, and the financial institution. The website creates a closed process between the three parties ultimately reducing the number of loans lost at the dealership."

Legg understands the used cars themselves won't scoop up a large share of members looking for car loans, but they will start the loan conversation with many. "We talk to members about the cars, we see who is coming in online and looking at them, and we talk to members about pre-approval, which is what's really keeping the business here."

With members paying off auto loans as fast as the credit union makes them, Cabrillo originally projected it would only keep auto loan volume flat this year by generating $1 million a month in car loans. Thanks to the Weekly Auto Deal and several promotions tied to it, Cabrillo is growing loans in 2011, bringing in on average $2 million per month, Legg said during the CUNA Lending Council's 2011 Annual Conference.

Based in San Diego, Cabrillo does not do indirect lending, but partnered with one local dealership to promote five of its used cars each week. The Weekly Auto Deal section of Cabrillo's Web site shows two photos of each car, lists all of the autos' details and features, and shows a price generally $2,000 below Kelley Blue Book. Legg said the partnership with the dealership works well, because the dealer gets the sale and the CU the loan.

Low Prices Emphasized

The site emphasizes the low auto price saying, "We don't think you'll find cars priced this low anyplace else." It lists prominently what the monthly payment will be, and at press time payments shown were calculated off a 2.9% APR rate. The site also includes tools to calculate loan payment, determine the value of a car, and apply for a loan online. There is also information about how to refinance an existing car loan with Cabrillo.

Legg explained the $182-million Cabrillo has used personalized URLs, or PURLs, for special pre-approval effort to promote the Web site deals, which attracted $3 million during April, three times what the CU projected. The PURLs averaged a 31.6% open rate with 19.6% click-through.

"They have produced very good results without a great deal of expense," said Legg. "Because of the PURLs we were able to see who clicked through and followed up with anyone who did not apply for a loan."

Cabrillo also conducted a 48-hour auto sale during which it posted 20 cars from the dealership and heavily advertised the promo. "The goal was $1 million in loans and we eventually got $2 million," said Legg, who noted the credit union spent $1,500 on advertising. "We also got good results by placing a Web banner on our bill pay site," said Legg. "It cost us $500 to do that and we got $84,000 in loans from it.

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