Do your members use payday lenders? If you think not, odds are you are wrong. Somewhere between 10% and 20% of credit union members opt to do at least some of their business with payday lenders. Why? Perhaps it’s the fear of being turned down, knowing they may have credit issues. Perhaps your hours and location aren’t convenient when members need a loan. But more likely, it’s because you don’t have the right product—a small-dollar-value, short-term cash loan that can be accessed quickly and conveniently.
Now credit union managers and board members who wish to implement a payday loan alternative have a practical and objective implementation guide at their fingertips. Payday Lending: A REAL Solutions Implementation Guide was developed by Nancy Pierce, Ph.D. — President of Tipton Research Group in Kansas City, MO for the National Credit Union Foundation (NCUF). As a REAL Solutions Field Coach, Nancy has assisted more than 100 credit unions through 8 state Leagues with the development and implementation of products & services to help modest means households build wealth and financial security. One of Nancy’s many areas of expertise is payday loan alternatives.
Our Payday Lending Implementation Guide is intended to help you develop solutions that are appropriate for your individual credit union and its members. It is not a turnkey toolkit, but some turnkey products are featured as examples. Other successful one-of-a-kind models are also featured along with loan results, collection techniques, sample procedures and marketing materials. The 10 credit union models included in the implementation guide were selected to provide a broad array of pricing structures, loan features, underwriting criteria and time-tested results. In addition, the guide includes a set of interactive Excel worksheets. to help you with pricing decisions. Two worksheets are built-in: one containing formulas for pricing open-end loans, and another for pricing closed-end loans.
You can be part of the solution to high cost payday lenders by offering the right product at a price that is a good value for the member, and also sustainable for the credit union. If your credit union is even remotely interested in offering a payday loan alternative, I urge you to download and review this implementation guide. It’s designed to be comprehensive, yet easy-to-use. After you take a look, do let us know what you think!