Credit Mailer Beats 0% Interest

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On the surface, American First Credit Union's recent campaign telling consumers its 5.45 percent auto loan rates were better than zero percent deals offered by automakers seems an impossible sell.


But the "Better than 0%" theme worked as the credit union based in La Habra, CA, generated more than $17 million in financing, well above the goal of $4 million. Net income from the effort totaled $525,000.


"The campaign was built around an education concept," marketing manager Ryan Zilker said. "A lot of automobile manufacturers and dealers were offering zero percent financing. But a lot of that is bait and switch, with only buyers with impeccable credit receiving zero percent, and it's often restricted to certain models with limited terms. The dealer ends up setting them up with their financing, which is often more expensive than what we offer. We were saving borrowers money."


Financing as low as 5.45 percent was mentioned prominently in the elements of the campaign. Inserts went out in the credit union's newsletters and in members' monthly statements. Pre-approval letters went to 15,000 members and 55,000 nonmembers in January, with reminder postcards sent in February.


The pre-approval letters targeting non-members included an offer to waive the $5 lifetime membership fee. The offer was to expire Feb. 28, but the response led to its extension through March.


"We worked with Experian to identify key people in our membership base as well as non-members," Zilker said. "With our members, certain credit criteria had to be met in order for them to receive the offer. For non-members, we tightened up our credit criteria. For both groups, we targeted homeowners with incomes over $60,000 per year who live in Orange County [CA]."


The campaign resulted in loans to 677 members and 171 people who had not been members of the credit union. Adding these 171 customers to AFCU's member base of 65,000 was a bonus, said Caroline Walsh, vice president of marketing and strategic planning.


"We had virtually no brand awareness in the community, but the timing was right to go head to head with the auto manufacturers," she said. "I'm moderately satisfied with the targeting of non-members, and I'm thrilled with the overall response that allows us to pay for the experimentation into the community by hitting home runs with our member base."


The average loan amount was $20,708, with used-car loans outnumbering new car financing.


The pre-approval letters mentioned a Car Sale Spectacular presented by Enterprise Car Sales. A small map showed the event's location.


"Enterprise has a car sales division, and they offered previously owned cars for sale to credit union members in the parking lot of one of our branches in Buena Park, CA," Zilker said. "We funded 13 of our loans at this sale."


Big Man Creative, Laguna Hills, CA, was the agency.


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