It's Tough to Beat 0%

July 06, 2010
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Marketers face the tough task of educating members about 0% financing.

Steve Rodgers

I’ve always wondered: Is 0% financing the rate you get on a new-car loan—or the odds of actually being approved at that rate?

Only people with spectacular credit scores and the ability to repay the loan quickly qualify for 0% financing. In fact, if you qualify, you probably don’t even need the loan in the first place.

Credit unions know how difficult it is to compete with all the fanfare of 0% financing from captive finance companies. They also know that 0% financing is largely smoke and mirrors—fewer than 10% of loan applicants actually get this rate.

But the smoke and mirrors are remarkably effective. The major car companies triggered a huge sales surge in March with their media blitz. In the depths of the recession a year ago, many analysts said the auto makers would be in good shape if they sold 11.5 million 
cars by the end of 2010. After only three months, they’re on pace to sell 12 million vehicles by year-end.

Toyota sales for March 2010 were up 41% compared with March 2009. Ford’s sales rose 40% and General Motors’ sales increased 43% on its four brands not being shut down or sold. Overall, sales increased 24%—the industry’s largest annual increase in eight years.

Marketers face the difficult task of educating members about the reality of 0% financing. Tell members:

• They might have to forfeit the factory rebate on their new vehicle in lieu of the 0% financing deal;

• 0% financing usually applies only to certain makes and models;

• Many 0% offers are restricted to short-term loans, resulting in higher monthly payments; and

• Members with poor credit probably won’t qualify for 0% financing.

If they do qualify, they should watch for “processing” and other fees. And if members are late with a payment, their 0% rate could jump considerably.

It’s not easy explaining that a low credit union loan rate can beat 0%. Fortunately, credit unions have been down this road before.


The June Credit Union Magazine will highlight these topics:

• INSURANCE SERVICES How has the recession affected members’ use of insurance products?

• MERGER TRENDS Tough financial times lead to more credit union mergers.

 CUNA’s ANNUAL REPORT The credit union movement’s premier trade association had a much better year in 2009 than in 2008.

• EXECUTIVE SUITE The people side of mergers.

• EMPLOYEE ENGAGEMENT Work force optimization technology helps credit unions find and keep the right people.

• DRESSED FOR DISTRESS Credit unions serving distressed industries go the extra mile for members.


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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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