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6 ways credit unions can attract Gen Z during coronavirus | Credit Union Journal

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Until 2020, Generation Z was set to enter the workforce in the middle of a thriving economy with record-low unemployment rates. However, in the midst of COVID-19, our youngest generation is coming of age during a global crisis.

Between the ages of 10 and 24, most Gen Zers have not yet had the opportunity to build an emergency fund, invest in a retirement plan or gain full-time employment. Now, the oldest of this generation are having to navigate finding a job, paying student loans and managing their own money during a crisis.

Credit unions were founded to address these very issues as well as wealth inequality and accessibility. So how can credit unions resonate with Gen Z as they come of age and enter adulthood during a crisis? It’s all about understanding and validating their fears, addressing their needs without judgement and tapping into their hopes for the future.

Offer low-interest student loans

Gen Z is the most well-educated generation to date. While the youngest Gen Z-ers are in fourth grade, the oldest of this generation have graduated college with more student debt than previous generations. While the costs of education and housing have skyrocketed, the average entry level income is barely higher than it was for baby boomers, giving Gen Z a tough financial start.

Gen Z is financially conscious and values stability. Experiencing a crisis as they enter the workforce, has made many Gen Zers anxious about achieving financial stability during an economic downturn. By offering low-interest student loans, you can validate their frustrations and provide hope for the possibility of a future without debt.

Provide high-interest checking and savings accounts

Accumulating wealth is harder than ever, especially in the midst of a global crisis. The penny-pinching mentality of traditional banks is a huge turnoff for this generation. Gen Z is understandably skeptical of old-school savings tactics, because what worked for baby boomers simply doesn’t work in the modern economic landscape.

For Gen Z, it’s about saving in small ways that add up over time, without having to put their lives on hold to pay off debt. Show them how they can do that with high-interest checking and savings accounts. Emphasize that high-interest accounts are an easy way to accrue wealth without having to put off important life events or pinch pennies throughout their 20s and 30s.

Make personal loan standards more accessible

The oldest of Gen Z tend to work in retail, grocery stores and restaurants. These young workers were vulnerable to job loss before the pandemic, as they are overrepresented in high-risk service-industry jobs. With little work experience, no emergency funds, crippling student debt and ongoing monthly expenses, Gen Z is in need of low-interest personal loans. But many Gen Zers have little or no credit history.

While Gen Z is financially conscious, many in this age group are anxious about their spending habits and financial status. Avoid messaging that shames Gen Z for their spending or lack of credit.

Instead, acknowledge the fact that little or bad credit is often unavoidable during a crisis and explain alternative ways that your credit union determines creditworthiness.

Offer financial guidance that validates their fears

Navigating early adulthood is scary, especially during a crisis. Many Gen Zers are receiving financial help from their parents and worry that money problems will hold them back from financial independence.

And their student debt isn’t helping. Gen Z has watched millennials struggle with student debt and want proactive advice to help them manage their debt better than millennials.

Keep in mind that many Gen Zers feel they cannot get sound financial advice from their parents, who likely can’t relate to their current situation. As a credit union, you can offer realistic, shame-free financial tips for the modern young adult, such as how to downsize expenses without giving up your social life, managing the cost of living when single, and paying off student debt while building an emergency fund.

Lead with digital banking

Gen Z is the first generation of digital natives who have little or no memory of a world without smartphones. If you think Gen Zers are going to wait five minutes while you put them on hold, think again. In fact, they probably won’t even call you, and they’re not likely to make the trip to your physical location.

This is a generation who values digital connection, high-speed online customer service, and the ability to manage their money from anywhere. Gen Zers will not work with companies who have low-quality digital services, slow-loading websites or limited online banking capabilities. If you haven’t already, start looking into implementing a customer services chat line to better connect with Gen Z digitally.

Embrace diverse representation

This year has brought about more than one crisis, with the rise of Black Lives Matter and an increasing demand for diverse representation and inclusivity. Gen Z is the most racially and ethnically diverse generation to date.

It’s no secret that economic downturns disproportionately affect minorities and low-income families, and COVID-19 is no exception.

Gen Z is the activist generation and they are choosing businesses who not only meet their needs, but align with their social and political beliefs. Now more than ever, it’s important that your credit union embraces diversity in your hiring practices, customer base, suite of services, messaging, and even your locations.

As our youngest generation comes of age, credit unions are scrambling to resonate with this new demographic of young adults. Remember that this generation is getting their financial footing during a global crisis. If you cater to their specific financial needs, validate their concerns during this difficult time, and offer guidance without judgement, you will gain loyal customers for life.



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How To Find A Co-Signer For A Loan – Forbes Advisor

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If you need to borrow money and your financial situation isn’t the strongest, you might be able to boost your odds of approval by seeking out a co-signer. And on the flip side, if you have good credit and a strong income, it’s possible that someone might come to you and ask you to co-sign for their loan.

The truth is that co-signing on a loan can be a win-win for both parties, but it can also result in broken relationships, destroyed credit and financial hardships for the borrower and the co-signer. In order to forge a successful co-signer relationship, you need to know exactly what a co-signer is, how the arrangement works and how to dodge potential pitfalls.

What Is a Co-signer?

A co-signer is a secondary person who agrees to pay back a loan in case the primary borrower defaults (i.e., doesn’t pay it back). When you co-sign on a loan, the loan is recorded on both your credit report and on the main borrower’s credit report. As long as they make on-time payments, you’ll get the benefit of those marks too. However, if the borrower misses a payment or just stops paying on the loan entirely, you’ll be on the hook for the loan. And if you fail to pay up, the lender can actually take you to court for the money.

If you’re looking to borrow money, lenders generally require you to get a co-signer if you have bad credit or no credit, limited income or something else that makes you a lending risk. This is commonly the case for young people who are just starting to build their finances, and who may not have any credit history yet. For example, roughly 90% of all private student loans were made with a co-signer during the 2019/2020 school year according to MeasureOne, a data analytics company.

However, not all lenders accept co-signers, so if you have a limited credit history and think you’ll need help qualifying, it’s best to confirm with the lender before applying.

When a Co-signer Makes Sense

Using a co-signer on your loan can make sense in a lot of cases:

  • You have bad credit
  • You don’t have much income
  • You’re young and you don’t yet have credit in your name

Using a co-signer can help you overcome these barriers so you can get approved for a loan. You may even be able to get lower interest rates if you and your co-signer are approved.

But in order for this setup to work, you’ll need to have a few things in place:

  • Trust between the borrower and the co-signer. The borrower is asking a lot of the co-signer, and so you’ll want to make sure you trust each other.
  • The co-signer needs to have a good credit score. If the co-signer’s credit is the same as yours—or worse—they may not be approved to co-sign on the loan.
  • The co-signer needs to be able to pay the loan on their own. If the borrower defaults on the loan, a co-signer should be able to comfortably afford the payments on their own.

Co-signer vs. Co-borrower

A co-signer is someone who agrees to be a backup for the loan payments. A co-borrower, on the other hand, is someone who’s equally liable for each payment (i.e., before it’s past-due), and who typically also shares ownership rights for whatever the loan was for.

For example, a husband-and-wife team may be co-borrowers on a loan for a house and both listed on the title. This means they own the home equally, and are both responsible for making payments each month.

But if a parent co-signs on their kid’s car loan, they aren’t first in line to make the payments. The lender only contacts them for payment if their kid doesn’t pay up. They also don’t have any ownership rights in the car—even though they’re on the hook to pay for it.

How to Find a Co-signer

Just about anyone can be a co-signer. But since you both need to trust each other, it’s more common to use friends and family with whom you already have an existing and healthy relationship.

If you need a co-signer, make sure you consider who to ask carefully. This is a big ask of them. You’ll need to be open when discussing your financial situation, and they’ll need to be comfortable with disclosing their financial situation, too.

It’s entirely possible that your first choice for co-signer may not be able to comfortably take on the financial responsibilities. If that’s the case, you need to be able to let them off the hook gracefully. Even if they are financially able to co-sign for you, they may not want to take the risk, and you need to be understanding of that.

In fact, it’s entirely possible that you may not have anyone close enough to you who could be a good co-signer. In this case, it may be necessary to consider some popular alternatives to a co-signer arrangement.

Co-signer Alternatives

Not everyone is able to use a co-signer, and that’s OK. But that doesn’t mean you’re out of luck. Here are a few other options to try:

Shopping Around With Other Lenders

The world is full of all types of lenders, some of whom specialize in the types of loan applicants who traditionally need a co-signer. These “bad credit loans” can be a good (if expensive) alternative, but you’ll want to be careful here as there are a lot of shady lenders.

Here are two important things to ask of any bad credit loan lender:

  • What are the rates and fees? Avoid short-term payday loans, which typically charge APRs of 400%, compared to the average two-year personal loan at 9.34% APR.
  • Do you report to the credit bureaus? This will help you build credit, so you don’t need to rely on these types of lenders in the future.

Use Collateral

You might not have a person who can guarantee your loan, but you might have property. Collateral refers to something you own that you agree to give to the lender in case you default on the loan. If a loan has collateral, it’s called a secured loan. Common secured loans include auto loans, mortgages and even some personal loans.

If your lender allows it, you may be able to qualify by agreeing to use something valuable you own as collateral. But remember, if you put up your car as collateral, for example, and fail to pay the loan, your lender can repossess your car.

Ask Friends and Family

If your friends and family are financially stable and willing to lend you the money but prefer not to co-sign on a loan, consider asking them for the money outright. You could ask for it as a gift, or better yet, a loan that you repay back to them.

If you opt for the loan route, make sure you draft up a legal agreement of your own. This reduces the likelihood that your relationship will sour over time if your co-signer feels like they aren’t getting paid back according to schedule. You don’t want to be that family member they’re always hounding for cash.

Go to a Credit Union

Credit unions are often more willing to work with you than banks or other lenders. Of course, it’s not a free-for-all and you will need to meet their loan requirements. But if you’re having a hard time getting approved elsewhere, it might be worth stopping by a credit union in your area to see if they can help.

The downside is that credit unions have their own membership requirements which you’ll need to meet before you apply.

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Fall 2020 Brings Increased Regulatory Focus on Financial Institution Detection of Human Trafficking | Moore & Van Allen PLLC

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On October 15, 2020, the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) released its Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity (Supplemental Advisory). The last time FinCEN provided guidance on identifying trafficking in anti-money laundering (AML) processes was in Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking – Financial Red Flags on September 11, 2014. The evolving tactics of human traffickers and behaviors of victims required updated guidance in order for financial institutions to better meet Bank Secrecy Act (BSA) obligations to assist the government in detecting and preventing money laundering. 

The Supplemental Advisory focuses on four emerging tactics used by human traffickers to carry out and hide the proceeds from their illicit operations: front companies, exploitative employment practices, funnel accounts, and alternative payment methods. Front companies are lawful, licensed, and registered businesses which are used by traffickers to comingle the illicit proceeds generated from their scheme of human exploitation with that of a legitimate business. Examples include massage parlors, nail salons, even electrician services, and faith-based mission work. 

Labor trafficking can be harder to detect than sex trafficking for AML departments. FinCEN’s Supplemental Advisory alerts financial institutions to examples of exploitative labor practices, including visa fraud, wage withholding, and recruitment fee advances. Note that in 2019, the Federal Acquisition Regulation: Combating Trafficking in Persons was amended to address prohibited recruitment fees and broadened contractor responsibility for violative recruitment fees in supply chains. 

Funnel accounts continue to be a common tactic wherein a trafficker coerces a victim to open one or more bank accounts in their own name, and then directs them to deposit, transfer, wire, and withdraw monies in amounts below a reporting threshold, for the benefit the trafficker or the enterprise. Because the accounts are often held exclusively in the victims’ names, the trafficker remains anonymous. 

Such account activity may lead to an Unusual Activity Report or Suspicious Activity Report but that would erroneously target the victim, not the perpetrator. Accounts may be closed by the financial institution, or at the direction of the trafficker, following overdraft or low balances, which can cause victims to incur bad credit status and prevent them from accessing financial services in the future. 

The Supplemental Advisory further alerts financial institutions to the prolific use of prepaid cards, virtual currencies, smartphone cash applications, and third-party payment processors to advertise their sex trafficking business and receive payment. 

Although the indicators list addended to the Supplemental Advisory is not significantly different than past iterations, it adds a set of case studies. Specific perpetrator and victim vignettes are effective in modernizing detection tools as they allow financial institutions to keep their pulse on real life examples relayed by law enforcement and survivor advocates. The Supplemental Advisory also reminds financial institutions that they are protected from liability for information sharing afforded under Section 314(b) of the USA Patriot Act. Traffickers often implicate multiple financial institutions and only through a wider lens and open communication can otherwise lawful-appearing activity be identified as suspicious.  

Finally, the Supplemental Advisory notes FinCEN’s Customer Due Diligence Rule, promulgated in 2018, which generally requires some financial institutions to identify beneficial owners of commercial customers. Under the Trafficking Victims Protection Act, “whoever knowingly benefits, financially or by receiving anything of value” may be subject to criminal and civil liability. Therefore, diligence and monitoring processes are to include potential third-party participants in an exploitive scheme.  

FinCEN’s advisory on human trafficking is timely. In the last few months, regulators have signaled increased attention on financial institution responses to human trafficking. This past summer, Deutsche Bank was fined $150M by The New York State Department of Financial Services (“NYDFS”) for compliance failures related to client Jeffrey Epstein, his sex trafficking enterprise and correspondent banks. In the Consent Order, NYDFS found the Deutsche Bank “conducted business in an unsafe and unsound manner [and] failed to maintain an effective and compliant anti-money laundering program.” This September, Westpac Bank was fined $920M USD by the Australian Transaction Reports and Analysis Centre (Australia’s financial intelligence, anti-money laundering and counter-terrorism regulator) for failures in AML reporting, record keeping and detection, including transfers indicative of child sex trafficking. This fine is the largest paid to an Australian regulator for violation of money laundering laws to date. Also in September, the United Kingdom announced that the U.K. Modern Slavery Act of 2015 will be strengthened to (i) allocate more funding to enforce its requirements and (ii) mandate that companies’ modern slavery statements cover certain topics ranging from due diligence to risk assessment. 

Increased regulatory focus on financial institution responses to human trafficking deserves attention.

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Can I Negotiate a Bad Credit Auto Loan?

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Yes, you can negotiate your deal on a bad credit car loan, though you may not have the same leverage as someone with a better credit score. Without the strength of a high credit score behind you, you may not be able to qualify for as low of an interest rate or monthly payment as you’re looking for. But a lot of things associated with an auto loan can be negotiated.

Preparing to Negotiate a Bad Credit Auto Loan

Before you go toe-to-toe with a dealer, make sure you know what kind of power you have in this arena. This means knowing your credit score and what’s on your credit reports. Without this information, you’re powerless to push back against a lender’s assessment of your credit situation.

Auto Credit Express Tip: Remember, you’re most likely going to be interacting with the special finance manager at a dealership, who talks to the lender on your behalf. The dealer isn’t responsible for the rates and terms you qualify for, and the lender can’t determine how much a dealership is willing to cut a deal.

The only way to know you deserve better terms than you’re being offered is to do your research. Find out what the average car loan looks like for people in similar situations. You don’t want to go into a dealer with unrealistic expectations.

  1. First, get your credit score and credit reports. Now is a great time to do this, because the three major credit bureaus – TransUnion, Experian, and Equifax – are offering U.S. consumers free weekly access to their credit reports. This deal only lasts until April 2021; you can request a copy of your reports by visiting www.annualcreditreport.com.
  2. Next, look online for some national averages on auto lending interest rates and see where you fall on the FICO credit scoring model. Knowing where you stand enables you to prepare for the next steps in your car loan: your budget.
  3. The final step to getting ready to negotiate on your auto loan is to plan your car buying budget. If you don’t know what you have to work with, or how to accurately calculate the out-the-door and overall costs of your auto loan, then you won’t have a leg to stand on when talking to a dealership.

What Are You Negotiating For?

Without a plan or a budget to refer to, you can’t have a goal to negotiate for. When it comes to a bad credit car loan, there’s no point in negotiating just because you can.

You should have a set goal in mind, whether it’s a target interest rate, a specific loan term, or a set monthly payment amount. Don’t give these things away to the dealer, though. Keeping your numbers close to the vest is what gives you the power to make a deal on your terms.

In order to get an auto loan deal you can live with, you have to know what you can afford. To find this out, you can do a few simple calculations that the lender does when determining if your budget can handle a car loan. This is your debt to income (DTI) ratio.

Your DTI ratio lets you know how much of your monthly finances are already being used by your existing monthly bills, including an auto loan and car insurance. If you’re using more than 45% to 50% of your monthly income, a lender may not be willing to add to that burden.

To see how much auto loan you could qualify for, and to find out if those monthly payments fit into your budget, you can check out our car loan and monthly payment calculators.

Know What You Can Negotiate

In order to negotiate on your bad credit auto loan, you have to know what you can and can’t change your lender’s mind on. Not everything on a car loan contract is negotiable.

Here’s a look at what you can have a crack at negotiating:

  • Can I Negotiate a Bad Credit Car Loan?Vehicle selling price – The first thing you should know you can negotiate on when it comes to an auto loan is the price of the car. The sticker price on a new vehicle typically lists the MSRP, or manufacturer suggested sale price, and may list a dealership price, too. You can ask for any price you want, but the dealer may not agree to honor it.
  • Your interest rate – Your APR is likely to be a bit higher than you’d like with bad credit, but you can always ask a dealership or lender if what they’re offering is the best rate you qualify for. Often it’s not, there’s no rule that says dealers have to offer you the lowest rate or best deal that you’re qualified for by a lender. With that said, you don’t have to accept a deal that stretches you too thin, either.
  • Your loan term – Shorter loan terms mean higher monthly payments, but stretching your loan too long means a higher overall cost. Being a payment shopper, only looking at the monthly payment and ignoring the overall loan cost, isn’t the place to be with poor credit.
  • Down payment amount – When you have credit challenges, you generally have to meet a down payment requirement set by your lender. However, it may not be set in stone. Depending on your other rates and terms, you may be able to negotiate the amount you need up front.
  • Your trade-in – If you’re using a trade-in to cover some of your down payment amount, you may be able to negotiate what you’re getting out of it. It also helps to know the value of your trade-in before you head to the dealership so you can have more leverage in negotiation.
  • Prepayment penalties – If you have to take on a longer term to get a more favorable monthly payment, you can save money in the long run by paying more on your loan whenever possible. Look over your contract carefully to make sure you aren’t penalized for this, or ask the lender to remove the clause if you are.
  • Optional features and equipment – Some features on the vehicle you’re choosing could be optional, and carry additional fees which can be negotiated on. Things like window tinting, fabric protection, and certain optional packages like wheel protection or cargo nets could be charges coming from the dealer. You don’t have to agree to these. This also goes for extended warranties and GAP insurance coverage.
  • Dealership documentation fees – A “doc fee” on any auto loan contract, which dealers charge for preparing your paperwork and talking to the lender on your behalf, is pretty standard, but the amount varies. There’s no reason to pay through the nose for this, and many states cap the amount you can be charged. Expect a minimum doc fee, but try to lower it as much as possible.

With all these things to haggle over, there are three main things that are non-negotiable when it comes to a car loan (which are set by the state, so there’s no getting around them):

  1. Taxes
  2. Title fees
  3. License fees

Ready to Negotiate Your Next Car Loan?

If you’ve tried negotiating on a bad credit auto loan in the past and were unsuccessful, don’t give up! Just because one dealership isn’t willing to work with you doesn’t mean that others aren’t.

Remember to keep your search for a car loan to a two-week window. If you apply for multiple loans of the same kind with different lenders within that time frame, you stop multiple hard credit inquiries from affecting your credit score.

Additionally, when you have bad credit and need an auto loan, it’s in your best interest to make sure you’re applying with a subprime lender at a special finance dealer. These lenders are able to help people in many tough credit situations, such as bad credit, no credit, and even bankruptcy.

Here at Auto Credit Express, we’ve cultivated a nationwide network of special finance dealerships, and we want to get you matched to one in your area! We’ll get right to work for you after you fill out our fast, free, and zero-obligation car loan request form.

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