Advice On Getting A Return On No-Margin Loans
Declining rates have squeezed margins so that on many loan products profit is almost non-existent, according to two speakers at CUNA Mutual Group's Discovery Conference here.
"If you haven't looked at individual loan profitability lately, you may think you are doing better than you are,"
"Some of your loan volumes may be up, but if you really look at the individual numbers, subtracting best deposit rate
Eisler said member protection solutions such as credit life and disability insurance, mechanical repair coverage, and
Rates of Return
"Though rates vary by state and coverage terms, a credit union typically earns $300 on a $25,000 car loan that is
According to Eisler, other benefits of packaging member protection such as credit life and disability insurance with
* Helps pay for credit union operating expenses and increases net income.
* Contributes to strong return on assets.
* Reduces delinquencies and charged-off loans.
* Saves time and money for collections.
* Protects member collateral and credit rating.
* Provides members with affordable coverage.
* Helps preserve member savings and assets.
* Promotes credit union full-service image.
Denise Anderson, CUNA Mutual lending protection manager and Eisler's co-presenter, suggested that lenders begin
The key to packaging loans with protection is to get the member's commitment to a payment that includes the
"Asking questions early in the loan process will help you assemble the best package for the member," Anderson said.
Anderson said most members object to protection coverages due to an existing plan. "By discussing employer plan
Rates of Return
Once a lender has opened discussions, a series of steps can be followed to package loans and protection solutions.
Follow this with the news that the package includes principal, interest and protection solutions. "At this point you'll
Anderson said the deal should be closed as soon as the member shows signs of interest. Explain the loan agreement
"In the end you'll, of course, thank the member for his or her business and you can use this point of discussion to
If a member does not want the loan package you have offered, offer them options, "a package with a higher rate,