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Predatory Debt Relief Loan

Predatory Debt Relief Loan. Policy & Experience. Policy Development. GCU Financial Coaches Frustration with existing GCU products that limited the amount that could be lent out due to credit score Members losing thousands of dollars waiting to qualify. Unsecured PDRL – May 2017.

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Predatory Debt Relief Loan

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  1. Predatory Debt Relief Loan Policy & Experience

  2. Policy Development • GCU Financial Coaches • Frustration with existing GCU products that limited the amount that could be lent out due to credit score • Members losing thousands of dollars waiting to qualify

  3. Unsecured PDRL – May 2017 • 2 meetings with Financial Coach • $0 or positive cash flow, payment 20% or less on monthly income • Complete TAT’s • Commit to meet monthly with a FC for 12 months • 2 years of continuous employment (no more than 3 sources, change only due to betterment) • 36 months with max of $5,000, interest rate of 20.99%, proceeds paid directly to Predatory Lenders • Executive Level Approval • Do Not Solicit letter to Predatory Lenders • Pay Yourself First CD

  4. PDRL Title Loan – March 2019 • The amount under the Pilot Project not enough to cover Title Max loans. • Same as unsecured PDRL • Vehicle must be primary transportation and full coverage insurance is required • 10% of payment amount set up to deposit to Auto Maintenance Savings Account • 125% of NADA Retail Value including title fees, GAP insurance & Auto Warranty if available • 48 month term, interest rate of 15.99%

  5. Title Max - GCU Loan Terms Comparison Borrower’s Monthly Income: $1,248.00 (Social Security) Collateral: 2013 Nissan Altima GCU Rate: 15.99% APR Amt. Financed: $9,882.58 (incl. interest due & GAP insurance) Monthly Payments: 48 @ $242.00 Available cash after expenses: $28.16 Finance Charge: $3,570.69 Title Max • Rate: 130.68% APR • Amt. Financed: $8,554.53 • Monthly Payments: 48 @ $962.00 • Available cash after expenses: -$668.76 • Finance Charge: $37,614.63 Savings with GCU PDRL: $34,043.94

  6. Results • End of 2017: • $46,219.90 (outstanding) • End of 2018: • $162,626.63, 50 borrowers • As of July 2019: • $167,933.49, 59 borrowers • One delinquent loan, $4,694.28 • Member out of state caring for sick relative

  7. Results (cont.) • 1 charge off July 2019: • $2,822.75, member passed away, had insurance but was pre-existing. • Savings in finance charges: $240,215.75, avg. per member: $3,695.63 (low of $1,873.50, high of $5,538.00) • Average APR: 105.89%, 65 Borrowers, $236,483.58 in new loans. • June of 2019: • $36,698.05, 4 borrowers PDRL title, savings of over $53,040.80!

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