ALEXANDRIA, Va.—Providing additional short-term, small-dollar loan options will help curtail the predatory practices of bad actors in the traditional, high-cost payday loan market, NAFCU is telling NCUA.
Responding to the agency’s request for comment on its latest payday alternative loans (PALs) proposal, NAFCU recommends that NCUA adopt PAL loans that have flexible parameters allowing credit unions to establish loans that work best for their members.
In a letter signed by NAFCU Regulatory Affairs Counsel Kaley Schafer, the trade association states: “Although there is a strong demand for short-term, small-dollar products in the marketplace, credit unions have experienced minimal demand for their products due to the restrictive nature of PALs I. As of March 2018, out of the 5,530 total federally-insured credit unions, 605 claimed to offer PALs, but only 523 of them showed recent activity. This equates to just 10% of credit unions actually making PALs. Given these low numbers of PAL participants evidences that the restrictiveness of PALs I has stifled credit unions ability to provide this loan product. With greater flexibility and the ability to serve members more efficiently, demand for PALs products will likely increase.”