Real Solutions - A National Credit Union Foundation Program

The Texas Credit Union League put this video together for press releases and inquiries about the need for payday loan alternatives in Texas.

“We wanted to show the REAL faces of people looking for these loans, and the need. The gentleman in the video was getting a loan for gas… Talking about payday lenders is one thing, but when we went out and interviewed real users it really brought insight to the need for alternatives. Now that we have alternatives in Texas the next step is to focus on awareness of the alternatives.” – Natasha Melugin, Texas Credit Union League

Fifty-four Texas credit unions will soon have a turnkey payday loan alternative product thanks to the National Credit Union Foundation’s REAL Solutions program and the Texas Credit Union League.

The new product will be launched in participating credit unions on March 30, the league said, after the CUs have trained their staff in how to “sensitively” offer the product.

Montana Credit Unions for Community Development (MCUCD) recently reported a collective increase of small loans of over 26% in the fourth quarter of 2010 from credit unions they were tracking. MCUCD attributes the growth to a state-wide public awareness campaign it ran last year to educate the general public in Montana about the availability of small loans at credit unions. The campaign was made possible in large part by a National Credit Union Foundation (NCUF) grant though the REAL Solutions program.

After a 60-day comment period, NCUA issued its final rule regarding short-term, small amount loans on September 24, 2010. This amendment to the general lending rule enables Federal credit unions (FCUs) to offer short-term, small amount loans (STS loans) as a viable alternative to predatory payday loans by charging a higher interest rate than is permitted under the general lending rule. However, it also imposes limitations on the permissible term, amount, and fees for these types of loans.

Rent to Own is generally understood to be a poor deal for consumers. Credit Union consumer loans are a replacement product but rarely do CUs market against RTO.

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.

Written by Nancy Pierce Real Solutions Field Coach

The payday lending industry has enjoyed exponential growth over the last 12 years. Estimates of payday loan volume range from $28 billion to over $40 billion per year.

Doug tells the story of a real member’s struggle to make ends meet, and leads to this fact: “If someone’s going to offer an alternative to payday lenders it’s got to be credit unions because no one else is going to do it.” Also, here is a recent quote of Doug’s regarding REAL Solutions…

“Real Solutions has been an integral part of the success of StretchPay. In fact, StretchPay would not nearly be the success it is today without the involvement of Real Solutions. They good folks at Real Solutions gave StretchPay a voice in the national credit union community it could not have attained on its own. Real Solutions is as much a part of the success of StretchPay as are the credit unions offering the valuable payday loan alternative.”