As the country heads back to work and school, it's a great time to remind customers that you have killer rates for auto loans. So, First Tech Federal Credit Union's marketing email to members yesterday promoting a 2.99% rate was well timed. And I love how the message is direct and to the point.

While the email could use a little more visual punch (graphics/typography), First Tech nailed the timing, product, price, and headline. So it is 90% there even before reading the copy. However, that's where the effort falls a bit short. Here's why (numbers correspond to screenshot below):

Minor issues in copywriting:
1. The second sentence in the opening paragraph is awkward because the phrase "keep that new auto loan payment in check..." is hard to understand. If you pair "check" with "payment," it sounds like you are referring to a checking account, not a low-payment amount.

2. Be careful with how you talk about rate discounts. They way First Tech wrote it, ".25% rate discount" sounds like the loan rate is going to be chopped by a full 25% instead of 25 basis points. It would be better to put a zero in front of rate, e.g., "0.25%" and perhaps call it a "rate reduction" instead of discount to be perfectly clear. 

Weak "offer acceptance:"
3. It's too hard to find the loan application in order to take advantage of the great rate. Members are directed back to the First Tech homepage where they must search for an loan app. The CU should either take members directly to a specific landing page for this offer, or at least drop them on the auto loan page. It does help that one of the four rotating homepage banners is for auto loans, but it's third in the rotation and only stays in view for 15 seconds or so.

In addition, not everyone wants to research and/or apply online. A phone number, at least for more information, would be a welcome addition to the message.

Finally, there is no sense of urgency, e.g., "the rate is guaranteed through the weekend" or even "act now before rates increase."

Overall grade: B

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First Tech Credit Union email to members promoting 2.99% auto loans (31 Aug. 2011; 9:28 AM Pacific)

In November, we predicted that large financial institutions would each offer dozens of mobile apps targeted to various lines of business and/or customer segments (previous post). PNC Bank, Wells Fargo and Chase each have two apps in the iPhone store.

Three weeks ago, a fourth financial company added its second app: Nationwide Insurance.

The company originally launched an app (inset) geared towards its insurance customers in April 2009 (press release; iTunes store link). This app is designed to assist its insurance customers when they have an accident. The most recent version includes a toolkit, auto claim form, agent finder and even a flashlight.

Then in mid-December, the company released a second app geared towards automobile shoppers, Cartopia (screenshots below; iTunes link; press release). It helps buyers research prospective cars on the go.

By inputting a vehicle identification number (VIN), consumers can quickly access the following info on a prospective vehicle:

• Car specs (fuel economy, dimensions, weight, etc.)
• Average retail and wholesale prices
• 5-year cost-of-ownership estimates
• Original warranty info
• Safety info
• History of the VIN number, powered by Experian's AutoCheck (similar to Carfax report; limited to six free lookups each month; note 1)

In addition, users can calculate monthly loan payments with a built-in loan calculator. Nationwide also provides links for customers to call in to apply for vehicle financing and or receive an insurance quote. Unfortunately, there is no online loan application or insurance price quote engine.

Finally, the app contains space to keep notes and rate the cars you are considering purchasing.

Relevance to Netbankers: If you are in the auto loan and/or insurance business, getting your name in front of car buyers as they shop is the ultimate marketing coup. While you may not be able to emulate all the functions in Nationwide's app (note 2), even a simple loan calculator and note-taking area, along with links to your call center, could drive incremental business.

                                                                                    Cartopia #2 Main Loan info with link to
     Cartopia #1: Splash screen                          insurance quote (via voice call)

Notes:
1. I was unable to access the report on my test vehicle; the error message said it was temporarily unavailable.
2. Although the app is loaded with features, its UI is a bit clunky and the app is only rated two stars in Apple's App Store. Consequently, a slimmed down, simpler app, would appeal to many users.  
3. For more info on financial services opportunities on the iPhone, see our March Online Banking Report.

As an analyst who covers new developments in online and mobile finance, I will forever be grateful to Apple for opening up the mobile-phone platform, thereby unleashing a rush of innovations sure to rival the Internet circa 1995 to 2001 (note 1).

The latest financial app is from none other than Mercedes-Benz. The luxury-car maker has several iPhone apps available to its fans, but the latest, which appeared in the App Store last Tuesday, is specifically designed for its finance customers (iTunes link to app). It's the first captive finance company with its own app, at least in the U.S.

Other than the striking homepage image, the app is pretty pedestrian so far. It allows registered users (note 2) to make a car payment, calculate the pay-off amount, and find dealers and customer service numbers. In other words, it's a lot like the company's website ten years ago (note 3).

But that's OK, for now. Financial brands should take advantage of the free publicity of the iPhone App Store and  post something, even if it's just a window to their Web app (worked for Bank of America).

Along those lines, SunTrust (iTunes link) is the latest megabank to join the store (last week), leaving US Bank, Capital One, BB&T, and HSBC as the remaining top-10 U.S. retail banks without their own iPhone app. Who will be the last one in?

Mercedes-Benz Financial's homepage includes iPhone link (6 Oct 2009)

iPhone landing page (link)

Notes:
1. For more info on the market, see our Online Banking Report: Mobile Banking via iPhone (March 2009)
2. Users must set up a profile online at Mercedes-BenzFinancial.com  before accessing their accounts via iPhone.
3. But I'm kind of surprised MB didn't include a payments calculator, standard fare at most car sites.

It's a sign of the times. Instead of creating interest in auto loans by showing a sexy new convertible on a windy seaside road, Chase offers to help customers stay in their same vehicle with a lower monthly payment (see today's homepage below).

Interestingly, the $44 number in the headline is the actual average savings to Chase auto loan refinance customers in August (see note 1 for how Chase calculated the savings). That makes the whole ad much more believable than the usual what-if scenario.

Instead of burying that key fact in the fine print on the bottom of the landing page (second screenshot), Chase should make it the main headline of the landing page. The bank could go "social" with it by adding testimonials, a blog or forum, calculators (how about one for the iPhone?), a Facebook page, sweepstakes and even a scrolling activity ticker showing actual refinance savings as they happen, much like the Progressive auto insurance quotes (see note 2).

It's not going to help Detroit much, but it's smart marketing for the pre-holiday period. A $44 lower monthly payment translates into $500 in annual savings, enough to put a little something extra under the tree this year.

Chase Bank homepage (13 Nov 2008)

Landing page pop-up (13 Nov 2008)

Notes:

1. Derivation of the $44 savings:

Monthly savings figure is for illustration purposes only. $44.43 is the average monthly amount saved by customers who lowered their rate by refinancing their auto loans with Chase during the period from 7/25/08 to 8/21/08 on which we have the information to determine savings. These customers started with an average balance of $17,500, with an average remaining term of 49 months at an average Annual Percentage Rate (APR) of 10.50% and refinanced on average for 53 months at an average new APR of 7.31%.

2. An activity ticker is one of our top-rated projects for next year as published last week in our Online Banking Report 2009 Planning Guide.

NationsBank/CarFinance.com

www.carfinance.com

CarFinance.com’s interactive home page.

Adding Interactivity to the Home Page

At first glance, CarFinance.com’s home page (above) seems cluttered and out-of-control. It even commits a Web faux pas with two scrollable frames even on a 17-inch monitor. But other than the scrolling problem, the home page is very clever, engaging users with several interactive elements. It’s almost impossible to leave the site without checking out their auto financing service. In fact, the company reports some 3% of visitors end up applying for financing.

The heart of the home page is an interactive questionnaire designed to give you a financing quote within seconds of hitting the site. The lefthand frame shows examples of popular cars, such as the new Beetle, and the monthly payment under its user-friendly “$0 down” program.

NationsBank’s (Charlotte, NC; $310 billion; 9.2 million ATM cards) CarFinance.com unit, acquired in the Barnett Bank merger, is blazing a new trail in auto finance with zero down payment, preapproved and prefunded car loans with APRs as low as 6.99% for new car loans with a 36-month term.

The conundrum for financial institutions looking to expand their car loan business is how to fight the indirect and captive programs that snap up the financing while the buyer is at the car dealer. Even with 12.5 million adults searching out car information on the Web last year (source: Cyberdialogue, 6/98), all but a few hundred thousand ended up at a dealership at some point in the process to finalize the purchase and pick up the car. And if you’ve bought a new car in the past 10 years, you know the final step of any car buying “adventure,” a pressure-packed interview with the finance guy (or gal) pitching financing, extended warranties, and whatever else is on the commission schedule that month. CarFinance.com may have invented a better way, though it doesn’t always work (see box below).

1. Users entering CarFinance.com are greeted with a five-question form that results in an initial financing estimate complete with APR, payment amount, and savings compared to the national average loan rate (see screenshot right). Final APR is determined after a full application.

2. Users submit an online mini-application (see table at right for details).

3. Once approved, a purchase draft is mailed to the user (via overnight mail if necessary). The draft is good for purchasing a new or used vehicle from any nationally franchised new car dealer and a few major used car dealers. Any car or truck can be purchased providing the price is less than or equal to the amount of the draft.

Never Give a Reporter a Car Loan

Apparently the process looks better on paper than it really is. In order to cash the draft, dealers must fax paperwork to NationsBank including proof of insurance, proof of buyer’s income, and bill of sale. InfoWorld Net Prophet columnist Dylan Tweney recently wrote about the glitches he experienced using CarFinance.com to finance a car at a Toyota dealership in Silicon Valley.

The dealership deposited the check without faxing the necessary documents. The check bounced and the dealer freaked out and initially refused to honor the deal. The reporter had to run interference between NationsBank and the dealership, even faxing documents himself over the course of a stressful week of negotiations before finally getting the loan closed.

He indicated that CarFinance.com’s customer service personnel were ill-equipped to deal with the situation. It left him very disillusioned with online lending. You can read his full story at www.infoworld.com/cgi-bin/displayIcommerce.pl?/prophet/980615prophet.htm

The story has a happy ending. In a follow-up conversation he reported that several readers told him that the process has worked fine for them. And CarFinance.com president called to explain how customer service issues were being addressed. It’s not called the bleeding edge for nothing.

The results from the initial questionnaire are shown in an easy-to-read table. Terms of up to 84 months are offered with a sliding rate scale beginning at 6.99% APR for 36 months to 10.5% for 84 months. They offer a unique 66-month term priced at just 100 basis points above the 36-month rate. The righthand column includes the savings over the life of the loan compared to national averages compiled by Banx Quote.

4. Buyers head to the dealer with the money literally in their back pocket. It can simplify dealing and insures the customer gets a competitive rate on car financing. Users can still see whether the car dealer can beat the NationsBank rate.

Questions in CarFinance’s Mini-Application

•  name
•  address
•  email
•  social security number
•  length of residence
•  type of residence
•  rent/mortgage payment
•  day phone
•  evening phone
•  employer
•  occupation
•  gross pay
•  length of employment
•  other income source
•  other income amount

Approval is promised within 48 hours with email notification, but the customer testimonials listed on the site talk about same-day approval. Checks can be sent by overnight mail so that applicants can buy the car within 48 hours of applying. Applicants also select a password so they can check back on their loan status.

The only limitations on what can be purchased with the draft are:

•  Must be purchased from a franchised car dealer representing a major automobile manufacturer, or certain used car chains.
•  Used cars can have no more than 75,000 miles and be no older than 1992 (terms of 61-72 months may be no older than 1994).

The program is simple to understand, easy to use and only takes 60 seconds to complete the application. There is no down payment required and few rules and regulations to master. Good for users, and very good for the bank. If they can resolve procedural problems with dealers, they may have invented a new way to finance a car.

Indeed, CarFinance.com’s application volume is encouraging. In early June, NationsBank SVP Joe Martucci said that the company was closing loans to 1.5% of visitors to CarFinance.com, an impressive number. But the company won’t reveal traffic counts.

Contact: Robert Ferber is President CarFinance.com; Joseph Martucci is SVP of Consumer Credit Policy in Jacksonville, (904) 987-2074.