Wescom Offers Zero-Interest Computer Loans at UCLA

Wescom Credit Union had a problem in March when it lost on-campus contact with UCLA students and staff because of the COVID-19 pandemic.

By August, it had come up with a way to relieve that problem by providing a solution to that UCLA family: An interest-free loan for computers and related equipment and software to better equip them for remote classes or work.

Wescom of Pasadena, Calif. ($4.5 billion in assets, 195,849 members) became UCLA’s official banking partner in 2015. It opened its first branch on campus in the first floor of the Ackerman Student Union in August 2019, just before the arrival of the 45,700 students enrolled for 2019-2020.

By March it had added 600 members through the branch. That’s when the pandemic forced the closing of the campus and branch.

Wescom’s managers began thinking about how they could maintain their relationships with UCLA students, staff and faculty as another school year loomed and the campus remained closed, said Jeff Smrcka, who joined Wescom earlier this year as vice president of consumer lending.

They began discussing the possibility of loans that would help students whose computer needs had grown with the dependence on remote learning. And they realized faculty and alumni were wrestling with similar issues as they worked from home.

Those discussions grew to include the marketing team at Associated Students UCLA, the not-for-profit group that delivers student services and runs the largest college store in the United States.

The UCLA bookstore regularly takes orders for computers and other electronics, and knows how to market them. And, of course, Wescom regularly makes loans, and is no stranger to small loan programs.

And students had urgent needs for computers, peripherals and software while usually lacking $1,000 to $3,000 in disposable cash.

The result was the Wescom Technology Loan, a zero-interest loan limited to UCLA students, staff or alumni buying computers, peripherals and software through the UCLA bookstore.

The loan limits are in two tiers. Those borrowing $500 to $2,000 have two years to pay back their loan without interest. Those borrowing $2,001 to $3,000 get three-year interest-free terms.

A monthly payment on a 24-month term would be $41.67 per $1,000 borrowed. A three-year loan for $3,000 would cost $83.33 per month. Monthly payments begin 45 days after the loan is completed.

The value proposition would be clear to students (and likely more so to parents). Interest rates on unsecured loans at Wescom range from roughly 12% for good credit to 18% for those with poorer or thin credit — a definition that would encompass many students.

The Technology Loan allows students to bypass those high rates while building credit to qualify for lower rates in the future.

“Having affordable, convenient options for Bruins to meet their technology needs is incredibly important, especially for our students,” Director of ASUCLA Marketing Ari Baron said. “By partnering with Wescom Credit Union for the Technology Loan, we can further that goal and ensure that Bruins can access current technology on any budget.”

Of course, Smrcka said no small part of the program is that it brings in new members, most of them students for whom this might be one of their first loans. Once Wescom has helped the young adults solve this immediate challenge, they are more likely to rely on Wescom to solve future problems.

“You need that one thing to get them engaged,” he said. “They’re going to remember that when they go to open their checking account, or their first auto purchase, and then it leads to their first home purchase or investments or whatever else down the line.”

Interest rates are already low, and the lost interest compares with $26.2 million Wescom generated in net interest income before loan loss provisions in the three months ending June 30.

“The cost of the loan is very, very minimal to have a member you can grow with,” Smrcka said.

Wescom began offering the computer loans Aug. 24. In the first two weeks, 35 students had taken out a technology loan. By the end of the year, it hopes to originate 50 to 100 a month.

“Application volume is strong, and those applications coming in are all new members,” he said.

So far, the average loan is $1,750, with most students favoring laptops. Most of the borrowers are new students, who hear about it during orientation.

And, as yet, Wescom has no expiration date for the loans.