In response to increased competition from captives’ more frequent 0% finance programs, Amplify Credit Union adopted a relationship-driven strategy, rather than a price-driven model, Tom Kist, Amplify’s vice president of consumer lending, told Auto Finance News.
“We knew that simply by pricing our loans to the lowest interest rate to attract volume was not going to be enough, so we needed to figure out a way to increase the volume and increase loan yield.” In the past six months, Austin, Texas-based Amplify cut its dealer base in half to about 25, and created a dealer relationship manager position. “It allowed us to better service our true partners, and increased our volume from about $5 million a month to $12 million in the past six months.”
Besides cutting the number of dealer partners, Amplify started to offer longer terms — as long as 96 months — for prime customers. “We will explore taking on more near-prime [loans] in 2016,” Kist said. Amplify has already started to buy lower-credit loans from its dealers in the hopes of scoring higher credit deals, too.
The credit union mostly operates in the prime pool, with 90% of customer credit scores above 679, 5% in the 649-to-679 range, and another 5% with scores of 639 and below.
This story originally appeared in Auto Finance News Update. Subscribe to receive more exclusive stories in your inbox.
