Home improvement loan idaho

Seven ways to boost loan volume

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BEARING INTEREST

> Deposits continue to flow into credit unions due to a slowing economy and weak loan demand (credit unions reported a paltry 1.5% growth in loan balances during the first five months of 2001). To turn this trend around, credit unions are coming up with innovative loan promotions. Here are some ideas that worked for me during my credit union days:

1. Two months/ two rates. This promotion lasted two months and featured two interest rates-one for secured and the other for unsecured loans. Secured loans had to be 50% collateralized. We ran this promotion several times and it was effective each time-the two simple rates seemed to create a feeding frenzy. It was also before risk-based lending.

2. Refinancing specials. We did a promotion that said, "kiss your high interest rates goodbye" and had chocolate kisses on the teller counter. ("Kiss" buttons were a flop because they created some harassment issues for the tellers.) We focused on refinancing loans from other lenders and auto dealers. When members with current loans at the credit union wondered why they couldn't reduce their rates, we said "You were sharp enough to come to us in the first place, so you've been paying lower rates all along." We also priced it so it was just slightly lower than our current rates.

3. Credit Unions for Kids. Members who donated $50 to Credit Unions for Kids got a one-percentagepoint discount on their loans. If they donated $100, they got two percentage points off.

4. Drawings. We had a drawing for a vacation package. Anyone who took out a real estate-secured loan was eligible. We awarded one package per week for a month.

5. Home improvement loans. We decorated the lobby with ladders and sawhorses and highlighted all types of home improvement loans. We also reduced the interest rate.

6. Staff incentives. This was one of our most effective promotions. Loan staff looked at members' loan applications and credit reports and consulted with members to sell our products and services. We didn't need to lower interest rates. Loans increased with marketing efforts and the implementation of incentives for loan department employees, who received bonuses based on loan growth and loan quality.

7. Visa promotion.

We put baskets of 50-- cent pieces on the teller counter, and if the teller didn't offer a Visa application to someone who didn't have one with the credit union, the member got a coin. Once in a while, a member who had been turned down for a Visa card would give the front-line people a hard time. Tellers were authorized to give them 50 cents-with a smile.

VALERIE BROOKS is a regulatory and governmental affairs specialist for the Idaho Credit Union League. She can be reached at vbrooks@idaho cul.org.

By Valerie Brooks

Idaho Credit Union League