Despite the apparent financial pain to cover the underwriting costs of small loans under $600, some credit unions still feel there is a segment of their membership that rely on this type of financing.
However, the market for smaller loans may be shrinking if research from a new CUNA Lending Council white paper is any indication.
According to Fighting for Our Turf: Threats to Credit Union Loan Markets, credit unions used to make more unsecured loans for small ticket purchases like furniture, jewelry, and electronic equipment. A large portion of that market has migrated to credit cards, which have become so pervasive that unused credit lines are typically disregarded in underwriting loans.
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