The millennial generation has contended with lower-paying jobs, the inability to save for home down payments, and soaring student loan debt—all in the wake of the Great Recession.
But now that the economy is on the mend, they’re asking themselves what comes next in terms of jobs, families, and home.
“We have to ask ourselves what we want from our futures,” says Lindsay Benson, a loan officer with Soo Co-Op Credit Union in Sault Ste. Marie, Mich.
Often those futures include the need to secure financing for purchases.
Benson was one of four 2015 CUNA Lending Council Conference Crashers who spoke about lending to millennials during a panel discussion at this year’s conference Monday in Las Vegas.
The 80 million millennials—who make up one-third of the U.S. population—spend $200 billion a year, but they can’t always get loans when they need them.
Many of these first-time borrowers are turned down because they have no collateral, no assets, and no credit history. They’re left to find financing elsewhere.
How can credit unions help? The panel offered two suggestions:
1. “Savingsloan.” Consider setting up a loan for the millennial, but hold back the proceeds. The member agrees to repay the loan at a nominal rate to build credit and learn about financing.
When the loan matures, they’ve established a credit history and savings balance equal to the loan amount minus the interest paid.
2. “CrowdLending.” This is peer-to-peer lending, and it gives a socially conscious aspect to borrowing. Repayment is easy because it’s done online.
The bottom line: credit unions must make it easy for millennials to make loan payments and build relationships with them.
“If your goal is to lend to millennials and that’s they only thing your credit union is interested in, you’re setting yourself up for disappointment,” says JT Blau, vice president of risk management for Call Federal Credit Union in Richmond, Va. “That’s a field of dreams approach: If you build it they will come.”
Instead of focusing just on loans, consider savings, financial education, and community service, all of which are important to millennials.