KANSAS CITY (4/3/09)--To help credit unions build sustainable payday loans as low-cost options for consumers, the National Credit Union Foundation (NCUF) has posted a toolkit of payday lending alternatives. Payday Lending: A REAL Solutions Implementation Guide
is available for free download on the REAL Solutions Impact Center. The 121-page toolkit was developed by former Credit Union National Association Chairman Nancy Pierce, president of Tipton Research Group in Kansas City and a field coach for NCUF’s signature program, REAL Solutions. As one of five REAL Solutions field coaches, Pierce has worked with eight state credit union leagues to help more than 100 credit unions develop products and services for working families with low wealth and modest means. The guide is intended to develop solutions that are appropriate for each credit union and its membership, Pierce said. “It’s not a one-size-fits-all toolkit; several turn-key products are featured as examples," she added. "Ten credit union models were selected to offer a broad array of loan features, pricing structures and underwriting criteria.” The toolkit includes sample procedures and marketing materials, collection techniques, and time-tested loan results. It also includes interactive Excel worksheets to help each credit union make pricing decisions on open-end and closed-end loans. “Credit unions can be part of the solution to high-cost payday lenders,” said REAL Solutions National Program Director Lois Kitsch. “Payday loan alternatives enable credit unions to reach out to members who are struggling financially and help them break the cycle of debt.” Credit unions that research members’ other credit obligations find that 10% to 20% of members have outstanding debt at payday lenders, Kitsch said. She said members typically cite three reasons:
* Some members admit in focus groups they’re afraid their credit union will turn them down because they have credit issues; * Other members believe their credit union’s hours and/or location aren’t convenient when they need quick cash; and * Most members say their credit union doesn’t offer small, short-term unsecured loans that can be accessed quickly and conveniently.