Loans are a basic part of life – they help consumers pay for cars, vacations and home renovations, among other big purchases – but they’re getting more complex. Today’s consumer lending environment is evolving rapidly due to increasing consumer demands, changing regulations and the digital transformation that has led to new entrants in the industry.
With more competition, depending on rates alone is no longer enough to attract borrowers. While rates are consistently the top factor consumers consider when choosing a lender, a compelling experience can be enough to win consumers over, even when a credit union’s rates aren’t the lowest. In fact, features that make up a lender’s overall experience – such as speed, transparency, channels and customer service – contributed more than 50 percent to the consumer’s decision-making criteria, according to PWC’s Consumer Lending report.
Kasasa’s consumer research shows that above all borrowers want control, flexibility and transparency from their loans. Millennials, Gen Xers and Baby Boomers, while they all have different borrowing behaviors, have this in common. Fortunately, community credit unions can deliver those experiences through a completely new loan type – the Kasasa Loan®.
The Kasasa Loan is the only loan on the market with Take-Backs™. It allows borrowers to pay ahead to reduce debt and access those extra funds if they need them. This revolutionary loan enables credit unionsto give members the control, flexibility and transparency they desire, while also benefitting from a lending platform that helps their institution compete and grow.
Control is crucial
With modern technology, people can control the temperature at their house remotely from their smartphone and send or request money with the click of a button. Why can’t loans be the same? Consumers want a loan that gives them the same type of experience they’re used to from other industries – one where they have control.
It’s important for consumers to be able to take charge of how much they pay and how soon they pay off their loans. By offering a fixed-rate, fixed-term loan with an agreed-upon payment schedule, consumers can get the initial disbursement and make regular payments until the balance is paid in full. Unlike someloans, the Kasasa Loan doesn’t charge fees for making additional payments. By removing penalties, borrowers have greater control and are encouraged to make smarter financial decisions and avoid paying high interest by getting out of debt faster.
Additionally, the Kasasa Loan comes with a sleek dashboard, designed for mobile, tablet and desktop users and accessible via the Kasasa app. Ithelps borrowers manage their debt by showing them the status of their loan in seconds. Within the app, users can view, edit and make payments as well as withdraw from their Take-Back balance with the tap of a finger, giving them control over their loan no matter where they are.
The flexibility factor
Everyone has made a choice they wish they could reverse, especially when it comes to finances where one mistake can have a lasting impact. The fear of making a mistake often holds borrowers back when paying off their loans. They know it’s better to pay them off sooner, but they are nagged by “what if” scenarios. What if they pay more toward their loan and get into a fender-bender? What if their house needs to be repaired? What if they face an unexpected circumstance they can’t afford because they paid more toward their loan last month?
Consumers want the flexibility to access what they overpaid in case of emergency. With the revolutionary Take-Back loan, borrowers can pay ahead to reduce debt but take that extra back if they need it. The flexibility to “take back” extra funds if needed means borrowers are no longer forced to choose between saving for unexpected expenses and doing the financially responsible thing ofpaying off their loan faster.
Target loan transparency
Consumers want transparency from their lender and need a better understanding of how paying ahead impacts their loan terms. Traditional amortization schedules can be confusing. Consumers wantto know the impact of payment decisions before committing to them. While most credit unions have given consumers the ability to visually manage checking and savings accounts, this practice is rarely carried over into lending.
The Kasasa Loan’s dashboard provides unprecedented transparency. Borrowers can see their minimum monthly payment and project the impact of their payment and withdrawal decisions, change monthly payments, pay extra and take back extra money they’ve paid. The ability to actually see the changes being made to their loan simplifies the payoff process and makes borrowers more likely to engage with their loan.
Credit unions also benefit
With the Kasasa Loan, credit unionsare able to offer borrowers control, flexibility and transparency. By offering unique product features in addition to low rates, credit unions can set themselves apart from their competitors and attract new members. The loan is built to ensure compliance with all relevant lending acts and regulations and has been designed to work with a credit union’s existing loan origination process. It does the heavy lifting and helps credit unions grow their institution while creating value for their borrowers and providing an innovative lending experience.The self-service nature of Kasasa Loans also reduces the operational cost of supporting consumer loans as well.
Kasasa’s award-winning lending platform has seen proven results. Nine out of ten consumers prefer the Kasasa Loan to a similarly priced conventional loan, and more than 50 percent of consumers would open a checking account at a financial institution if that’s what they had to do to get the loan. Furthermore, 98 percent of consumers said they would refinance existing debt at the same rate to get the Kasasa Loan.
The borrowers have spoken – there’s more to loans than just rates. To stay ahead of increasing competition, credit unions need to adapt to changing consumer expectations, borrower trends and new technology. By offering a loan with control, flexibility and transparency, credit unions can attract members and enhance their institution’s bottom line.