The only thing worse than a root canal is paying the dentist's bill afterwards. That's what inspired Affinity Group CU CEO Tom Miller to ask his dentist how patients paid for expensive procedures.
"He told me he had a loan program through Citigroup but said it was expensive. Otherwise, his patients got loans at a bank or used a credit card. So I asked if he'd show me the paperwork," Miller told The Credit Union Journal.
Miller saw the agreement and proposed an alternative, which his dentist liked. "He was being charged 7.5% interest. I said that wasn't fair. Why should he have that on his shoulders?" he asked.
Miller knew his credit union could do better using CU*Answers' Retail Direct Loan Program, which provides indirect loans to merchants. "It's not root canal," joked Miller. "Or maybe it is, sometimes. But the price of restorative or cosmetic dentistry can be expensive, and a lot of people simply don't have that kind of money available. They need loans. But the cost of those loans doesn't have to be prohibitive."
CU*Answers developed the Retailer Direct Loan Program in response to requests to expand lending opportunities beyond the auto market, and make it as convenient as possible.
Here's how it works: CU*Base clients establish a secure website for a retail relationship, they sign on using a user name and password to complete an application, it goes into a queue where it's analyzed by a set decision process and returned. (If no decision process is in place, the loan is handled like a conventional loan.) The system displays the loan decision information and finishes the application. A ready-to-sign contract can also be transmitted. The dentist can view all loan histories and keep track of what's been approved and what's in the pipeline.
"We'll tie in with the Reed Data e-signatures application (CU Journal July 17, 2006) complete the deal right there within minutes and send a check to the doctor the next day," said Miller.
"This application is good for any business that needs alternative financing for clients. The possibilities are endless," Miller said, who recently was a founding partner of a six-member CUSO called CU Partner Solutions. Because not all the other members use the CU*Base system, Miller's CU will host loans for them, then participate them out among them. AGCU will always retain a minimum of 10% of each loan. He's also looking into providing a commercial loan package of services for the dentist, who advised Miller that other dentists are interested in the program.
Each business will receive a unique co-branded website, in partnership with Affinity Group Credit Union (or another credit union). "We'll call our program Business Direct," Miller said.
The initial beta target sites for Affinity Group CU will be patient procedure financing for doctors and dentists, who face no cost. Copies of any documents and a welcome letter will be mailed directly to new members by AGCU. "This program is ready to go, we just need a few good partners to get it off the ground," said Miller.
