ORLANDO, Fla. – The non-prime lending landscape is fertile with opportunities for credit unions to grow loans and improve yields, a lending expert told attendees. "The bottom line is non-prime lending can be a tremendous opportunity to grow loans and improve yields," said Steve Martin, CUNA Mutual vice president of Lenders Protection. "It can be very rewarding but risky, though there are many ways to mitigate the risk. It definitely requires a credit union to manage the business very differently than with prime loans." Martin called non-prime lending the fastest-growing in the marketplace. Though he said non-prime vehicle loans are likely the most lucrative for credit unions, other non-prime opportunities exist in mortgages and home equity loans, and credit card and payday loans. "These borrowers are getting these loans elsewhere and paying much more for them. If credit unions do it right, they can offer members significantly better rates and terms than they're getting elsewhere," Martin said. "It's a win for the member and for the credit union, which can make a significantly higher yield than on prime loans." Martin told the group how non-prime lending has grown and why. He said the average household is challenged financially, with households averaging seven credit cards and card balances of $9,000, with 30% of cardholders having a balance of more than $30,000. "What does the alternative lending marketplace look like? There are many different types of lenders involved, some with interest rates reaching as high as 3,000 percent," Martin said. "Compared to what non-prime borrowers are paying elsewhere, credit unions can offer deals that are beneficial to both parties." Martin cited statistics to illustrate the opportunities that exist for credit unions in non-prime lending: 30 to 40% of the population is non-prime; 0 to 20% of the population is sub-prime; $325 billion in sub-prime mortgage loans were originated in 2003, vs. $35 billion in 1994; and $200 to $275 billion in non-prime vehicle loans were originated in 2003. Martin recommended credit unions seriously consider building some portion of non-prime lending into their future business plans. [email protected]