MADISON, Wis.-Despite the economic downturn, Filene Research Institute chief Mark Meyer believes lifestyle lending will remain in high demand, especially for medical procedures.
"When you are looking at the elective medical surgeries that are going to improve the quality of one's life (orthodontics, LASIK, gastric bypass) I don't necessarily see consumers lessening their demand for that," he said.
Meyer also believes that credit unions serve to provide their members a chance to achieve their dreams, and many individuals dream about changing their appearance instead of owning a beautiful house or stylish car.
"I don't know that it is the role for the financial institution to play judge on what their dreams should be," he said.
"Lifestyle lending is getting back to where the member needs you to be," said Kirk Harris of Lifestyle Lending Solutions.
While Meyer believes lifestyle lending to be merely a solid book of business as opposed to a "transformational" one, Harris believes there is a massive upside-one that may prove to be even better on the balance sheets than indirect auto loans.
"The problem with auto indirect is that it has moved into a position where the credit unions are making very little money on the spread of interest plus they are paying the dealerships. When all is said and done, a credit union hasn't made much on the auto side," he said. "This product, if done right, this will be far more profitable than their auto programs because of the simple nature of a high loan yield on unsecured loans."
Strong underwriting and good relationships with business providers are key to a successful program and Meyer believes that members are more likely to pay off such loans as opposed to credit cards, because they see true value in what they receive.
