Report Forecasts 'Lifestyle Lending' As New Opportunity
So-called "Lifestyle lending" is gaining ground among credit unions, according to a new report.
Lifestyle loans, which are typically unsecured and defined as a "variety of non-traditional loans that can both enhance and finance a member's lifestyle, including adoptions, cosmetic surgery, infertility treatments, and uninsured medical expenses."
A new report from the Filene Research Institute, entitled "Lifestyle Lending Offers Innovation and Growth for Credit Unions," and authored by Mark Meyer, director of innovation for the Filene Research Institute, suggests that when it comes to lifestyle lending "credit unions have advantages that other lenders lack-a direct relationship with members, a location within the community they serve and a reputation as a trusted adviser."
In his report, Meyer states that credit unions are getting involved in lifestyle lending to strengthen their relationships with members and to offer creative financing, and offers as an example Barry Shaner, president of Toledo Area Community Credit Union, which began offering lifestyle loans to finance cosmetic surgery in 2004 in response to a member request.
Other credit unions are following Toledo Area Credit Union's lead and finding that financing cosmetic surgery is a means both to serve members and grow their loan portfolios, the report notes, pointing to the dramatic growth of surgical and non-surgical cosmetic procedures in the United States. Some 8.3 million cosmetic procedures were performed in 2003-an increase of 293% since 1997, according to the American Society of Aesthetic Plastic Surgery.
"Financing adoptions are another growth opportunity in the lifestyle lending portfolio," the report notes. "For many couples, creating a family comes at a high price, both emotionally and financially. Overseas adoptions require a substantial financial commitment, ranging from $20,000 to $30,000. Infertility treatments-not covered by most insurance plans-are another potential need for members. Spending on in vitro fertilization increased 50% during the past five years, reaching a total of over $1 billion in 2003, according to U.S. News and World Report."
This new report is a follow-up to the 2004 Filene i3 Progress Report, "Innovation: Novel Ideas from the Next Generation of Credit Union Leaders."
Copies of the "Lifestyle Lending" report are available free to Institute members; $75 to non-members. For info: www.filene.org.