Interest Rates Have Increased

We’ve all noticed that interest rates have risen over the past several months. The Fed isn’t done with rate increases, and this limits the number of prospects that qualify to refinance their vehicles. In some markets, available prospects have been reduced by more than 50% because some lenders have been aggressive with their rate increases. The decision that lenders need to grapple with is whether the yield is more important than their growth. There seems to be a consensus that you can’t have both. On the surface, that seems to make sense, but what appears to be an obvious assumption may be quite misleading.

Marketing is a Game of Pivoting

As markets change financially like we are seeing today with interest rates, financial institutions must anticipate future market changes and be prepared to pivot. Waiting until the market has already changed is frankly too late. In addition, when one segment of the market hits a downturn another segment offers an opportunity. Let’s explore how that is playing out in this market.

Home Equity Values Create a Huge Opportunity

Interest rates are up and will continue to increase in the near term. Since the beginning of the pandemic, the value of homes have spiked. We’re now seeing consumers relying more on credit cards to deal with the inflated prices at the pump and the grocery store. That leaves consumers with a tremendous opportunity to utilize that newfound equity in their homes to eliminate high-interest rates and payments on their credit cards. I recently had a conversation with a senior marketing executive at a large credit union that I consider to be one of the brightest marketing minds in the business. He is determined to grow his membership base by acquiring loans. This is his primary growth strategy for the upcoming year. Let’s be brutally honest, if you don’t help improve the financial situation of your members or customers, someone else will.

Enhanced Data Analytics is the Key

Let’s get back to the main topic of the article. The auto-refi market has declined due to increased interest rates. So, where do we pivot
to compensate for the reduced market size? To be quite honest, you shouldn’t have to pivot. The
tools should already be in place to extract the data that can offset the market downturn. So, consider these three questions:

1. Do you have a plan in place to ensure you retain every customer and protect them from being poached by another financial institution?

We typically hear that clients and prospects have this capability but rarely is it included in a comprehensive plan.

To be honest, hiring has become a very difficult proposition here in the states. In addition, the
demographic make-up of our population has changed. How do we deal with these two very
important changes in the US market? To my surprise many financial institutions and
fintech’s have taken parts of their operations “offshore”. The actual phrase is “near shore”.
These operations are throughout Central
America and the Caribbean. Having some of
the same issues, I explored this opportunity.
Wow was I surprised. First of all, the security
measures utilized are far superior to what most
financial institutions employ for both their
facilities and data utilization practices. Imagine asking your employees to empty their pockets upon entry to your branches and go through the same detection protocols we endure at the airport. Second, imagine not allowing paper, pens, and cell phones inside your facilities.

Josh Luongo
VP of Data Analytics

Sai Karteek Edumudi
Performance Data Analyst

Bansari Shah
Performance Data Analyst

Stellar Insights Fall 2022 Introduction

We hope the content presented in this edition of Stellar Insights will be helpful during the year-end process.

Instant Profitability on New Members

Actual return on investment for acquiring new members.

Has The Auto-Refi Market Declined?

It doesn’t have to, even with today’s rate increases.

Stellar Insights Fall 2022 Introduction

Welcome to our Fall Edition of Stellar Insights. This time of the year is critical as we start to analyze year-to-date results, begin strategic planning for the upcoming year, and ultimately finalize budgets and plans. That being said, we felt it was crucial to highlight our evolving solutions and identify the vital opportunities financial institutions have at their disposal. We hope the content presented in this edition of Stellar Insights will be helpful during this process.

One of the main concerns for our clients is sustainable loan volume. We’ll explore how enhanced analytics can be a valuable hedge against the declining auto loan refinance population due to increased interest rates. This is not a new phenomenon. I often joke that we were a fintech well before it was even a thing. In our experience, when the market enters a lull, it’s paramount to evolve your marketing strategies around your data analytics and capabilities.

Another concern that most financial institutions face are operational capabilities. Given this difficult employment market we are all experiencing, it’s imperative we have
options in order to stay operationally efficient. We’ll focus on options we offer our clients to address this ongoing issue in our feature article titled “Explore Our Stellar Loan Processing Option.”

Has The Auto-Refi Market Declined?

It doesn’t have to, even with today’s rate increases.

Instant Profitability on New Members

Actual return on investment for acquiring new members.

Has The Auto-Refi Market Declined?

It doesn’t have to, even with today’s rate increases.

Stellar Insights Fall 2022 Introduction

Rate Increases Got Your Loan Volume Down?

As interest rates increase and the mortgage market slows, many financial institutions are seeing a decrease in loan volume. 

Our Stellar Auto Loan Recapture Program continues to perform extremely well for our clients.

Since 80% of all auto loans are originally financed at a dealership, dealers will continue to mark up loans, creating an ever-renewing bucket of potential households paying higher than customary rates.

The concept of recapturing auto loans isn’t new, but our program was carefully designed to go above and beyond our competitors to execute strategies with a proven recipe that drive results.

What Makes Stellar Different?

Think all auto loan recapture programs are the same? We’d love to show you the Stellar Difference.

Here are a few of the reasons why you should choose to partner with Stellar.

Loan Processing Department

Our in-house loan processing department is able to produce and package these loans to have them ready for booking. We are a SOC 2 compliant department that handles all the back-office steps to make sure your application is finalized correctly and in a timely manner. We take over after the initial approval and handle every step till the end, including filing the necessary title work to make sure your lien is perfected. We also offer GAP and Warranty products to help maintain the value of the vehicle throughout the life of the loan.

Member Retention is Essential to Growth

Think about how much it costs to secure a new member. Now think about how little time and money you dedicate to retaining them long-term. 

With the Stellar Financial Group’s auto recapture program, an integral part of the solution is ensuring we serve every member that has an auto loan with another institution. 

Consider this important fact. If you don’t assist them in refinancing that auto loan that they originally financed at a dealership most likely at a higher interest rate than required companies like ours, and there are many, will target those members and most likely move them to a competitor. 

Stellar Lead Exclusivity

Unlike many of our competitors, The Stellar Financial Group offers both member and prospective member lead exclusivity.

There is NO data overlap between clients.

1. Each client’s confidential information is secured in separate silos.
2. All results, reports, leads, and confidential information will not be shared with any other credit unions.
3. Each credit union’s membership loan base is suppressed out of all credit union clients, to ensure no attrition from our program.
4. Any lead generated through the Stellar program is exclusive to the credit union that we targeted on their behalf. No applications are shared with other financial institutions.
5. All offer letters are uniquely coded for that credit union. All responses are driven by the promotional code assigned to that prospect.