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Quickcash - Langley FCU

Quickcash - Langley FCU



Overview of Langley\'s Quickcash - A Smart Alternative to Payday Lenders.

Overview of Langley\'s Quickcash - A Smart Alternative to Payday Lenders.



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Quickcash - Langley FCU Quickcash - Langley FCU Presentation Transcript

  • Brett T. Noll Senior Vice President / CMO
    • Customer uses post dated check as collateral
    • Employment is verified
    • Subprime credit bureaus contacted
    • Loan usually for 15 to 30 days
    • Fees up to 15% in VA
    • Very convenient
    • Very costly
    What is a payday loan?
  • Payday Loan Locations
    • Payday Lending Stores
    • Check Cashing Outlets
    • Pawn Shops
    • Call Centers
    • Internet
  • Payday Users
    • 2/3 under 45 years old
    • 62% female with children under 18 living at home
    • Employed (50% in job less than 3 years, 23% in current job over 5 years)
  • Payday Loan Customer Profile
    • Single parent families with low income
    • Young adults
    • Minorities/immigrants
    • People lacking money management skills
    • Anybody!
  • Astounding Statistics
    • 22,000 payday lenders nationwide
    • Estimated $6 to $8 billion dollars in fees last year
    • Estimated 17% of military use payday loans (225,000 personnel)
  • Astounding Statistics
    • In 2003, more than 250,000 Virginia consumers received more than one payday loan.*
    • In 2003, 124 payday lending stores opened in Hampton Roads.**
      • 40 Virginia Beach
      • 36 Norfolk
      • 26 Newport News
      • 20 Hampton
    • The VA Bureau of Financial Institutions reports that 1/3 of the total statewide payday lenders reside in the Hampton Roads area.***
    Sources: *Better Business Bureau Serving Western Virginia Consumer Alert: Virginia Data Proves Payday Loans Equal Costly Cash. June, 2004. **Flagship News. It’s Hard To Break Free From Payday Lending Trap. http://www.flagshipnews.com. June 19, 2003 ***The Virginia Pilot. Payday Lenders Expect Booming Business Here Military Presence, Tight Incomes And A New State Law Help Draw Short-term Loan Firms to Hampton Roads. October, 2002.
  • Why are Payday Lenders popular?
    • Better hours
    • Better locations
    • Provide what people need, fast
    • No hassle
    • Sometimes better than bouncing checks???
    • Sometimes better than late payments???
    • No alternatives???
  • Developing A Solution – A Six-Step Process
    • Identify The Need
    • Benchmark
    • Shop The Competition
    • Develop Differentiated Product
    • Brand The Product
    • Get The Word Out (July, 2004)
  • Payday Lending Comparison 18% - $1.73 $500, 7 day term N/A LFCU QuickCash 780% - $75 $500, 7 day term $15 per $100 PAYDAY LENDER APR 7 DAYS Term Fee Lender
  • Approval Criteria
    • Borrower must have been an LFCU member for at least 180 days at time of application
    • Borrower must have had direct deposit of their payroll
    • Or, has had a QuickCash loan with LFCU in the past and repaid as agreed
  • Branding Your Product
    • Naming Your Baby
    • Playing Tag With Taglines
    • The Color of Money
  • Newspaper Advertisement
  • Mass Transit Advertising Full Bus Wrap Large Bus Poster
  • Additional Advertisement Teller Handout Air Force Base Educational Handout Press Release
  • Weekly Loan Activity
  • Factors In Building Your Payday Loan Alternative Model
    • Annual Fee
    • Pricing
    • Direct Deposit Requirement
    • Forced savings
    • System Notification for Repeat Borrowers
    • Financial Counseling
    • Staff Training
    • Go back to what people like in payday lenders - does your program fit the bill?
  • Setting up products to complement your alternative
    • Starter Platinum
    • Line of Credit
    • Share Secured Loans
    • Financial Counseling
    • CreditBuilder
    • Langley Saves
  • LFCU Product Success
    • Guess how many loans per month we average today
  • Product Success
    • To date LFCU has processed almost 16,000 loans & disbursed over 9 million dollars
  • Product Success
    • Since July, 2004, we’ve saved our members over $1.2 million in fees they would have otherwise incurred had they borrowed at Payday Lenders
  • Proposed legislative ideas in Virginia
    • Capping interest rates
    • Limiting the number of payday loans a person can have to 3
    • Allowing a day to pass before a consumer can take out another
    • payday loan after paying off the first
  • The Payday Lending Industry fights state legislation.
  • What happens when you call an internet lender?
  • Thanks largely to payday lenders, the 2007 John Warner Department of Defense Authorization Act contains language that could ultimately have an adverse affect on any financial institution serving the military.
  • Defense Authorization Act:
    • Identifying active duty military and immediate family (includes Reserves and National Guard)
    • A 36% rate cap on loans inclusive of optional fees, charges for services, and late charges
    • 2 separate APRs??
    • Excludes refinancing
    • Requirement of oral disclosures
    • Prevents Car Title Loans
    • As worded, could prevent payroll deduction as means of payment
    • Severe sanctions of imprisonment for rule violation
  • You might have a Payday Lending problem if…
    • Your member’s average APR is higher than Derek Jeter’s batting average
    • There are more payday lenders popping up in your community than Starbucks
    • Results of your annual member survey show that Cash Advance America is your members’ Primary Financial Institution
    • Payday lenders ask to lease space in your buildings
    • You start seeing Board members’ cars in payday lender parking lots!!!
  • Thank You