MONTAUK, N.Y. -
In 1922, the credit union opened for business in the Montauk area of Brooklyn. It has since moved to downtown Manhattan on West 26th Street in the back yard of some of the world's largest banks. How does a small credit union compete with the behemoth financial institutions?
It has a niche business of taxi medallion and limousine "radio" loans. Cab drivers are required by the City of New York to buy a taxi medallion that costs around $420,000. The credit union offers a three-year balloon loan currently at 7.5%, which is amortized up to 25 years.
Radio loans are similar instruments for limousine drivers who purchase a numbered registration and a share in the limousine company. The current terms are up to seven years at a fixed rate of 8.5%. Loan amounts range from $15,000 to $110,000.
These loans are paid back with regularity while delinquency is low and defaults are rare. Until recently, banks have passed on these loans. Why do members keep coming back for loans now that banks are interested?
"Our rates are competitive, and we treat the member well," said Mike Turino, VP-lending with the $59.9-million credit union.
"When drivers applied for loans, banks would shun them; they are not likely to go back after they have been treated like that," Turino told the Credit Union Journal. "We give members an opportunity to start a business and our rates are competitive."
