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I may have written about this customer a long time ago. She's a frequent loan customer, taking out small loans (less than $2000) about once a year, sometimes more often. Management is trying to get us away from doing small loans like that. They're a lot of work for not much return.
Let's call her "Jennifer." Jennifer has a good job with the state. She lives beyond her means, though. Jennifer's checking account is frequently overdrawn after one of her shopping trips. We charge her overdraft fees, but that doesn't seem to be a deterrent for her. She usually asks to take out these small loans when her checking account is overdrawn or about to be. So despite her saying that she's doing landscaping or other home improvements, it's obvious that's just an excuse.
When Jennifer started this pattern, years ago, she had pretty good credit. But as time has gone on, she has had more and more late payments show up on her credit report, which has dropped her credit score. Based on my calculation of her debt to income, she should have plenty to make her monthly payments. If she didn't go on these shopping sprees every couple of weeks, she'd be in good shape.
If we followed policy, we would have stopped giving her loans a while ago. But because Jennifer is the daughter of a prominent figure in the community - her dad is retired from several city organizations - and he's friends with Goodhair - so we keep making exceptions for her.
So when she recently emailed me asking for a small loan for "landscaping," I offered her a different product. We have an overdraft line of credit. It's attached to the customer's checking account, so any day they would otherwise be overdrawn, the computer automatically advances on the line of credit and deposits those funds into the customer's checking account. The customer pays interest on the line, but doesn't get overdraft fees. For most customers, it's much cheaper and they don't have to worry about checks getting returned. Naturally, Jennifer jumped at this.
Friday, we set up a $2500 overdraft line of credit for her. That's more than twice what she was asking for for "landscaping." Today, Wednesday, she's already used $1000 of the line, and the only item that's hit her account that could conceivably be from a landscaping place is only $80.
I expect that she'll quickly use the rest of the line and be overdrawn anyway. I'm not surprised. I'm not really even disappointed. I basically expected this.
Let's call her "Jennifer." Jennifer has a good job with the state. She lives beyond her means, though. Jennifer's checking account is frequently overdrawn after one of her shopping trips. We charge her overdraft fees, but that doesn't seem to be a deterrent for her. She usually asks to take out these small loans when her checking account is overdrawn or about to be. So despite her saying that she's doing landscaping or other home improvements, it's obvious that's just an excuse.
When Jennifer started this pattern, years ago, she had pretty good credit. But as time has gone on, she has had more and more late payments show up on her credit report, which has dropped her credit score. Based on my calculation of her debt to income, she should have plenty to make her monthly payments. If she didn't go on these shopping sprees every couple of weeks, she'd be in good shape.
If we followed policy, we would have stopped giving her loans a while ago. But because Jennifer is the daughter of a prominent figure in the community - her dad is retired from several city organizations - and he's friends with Goodhair - so we keep making exceptions for her.
So when she recently emailed me asking for a small loan for "landscaping," I offered her a different product. We have an overdraft line of credit. It's attached to the customer's checking account, so any day they would otherwise be overdrawn, the computer automatically advances on the line of credit and deposits those funds into the customer's checking account. The customer pays interest on the line, but doesn't get overdraft fees. For most customers, it's much cheaper and they don't have to worry about checks getting returned. Naturally, Jennifer jumped at this.
Friday, we set up a $2500 overdraft line of credit for her. That's more than twice what she was asking for for "landscaping." Today, Wednesday, she's already used $1000 of the line, and the only item that's hit her account that could conceivably be from a landscaping place is only $80.
I expect that she'll quickly use the rest of the line and be overdrawn anyway. I'm not surprised. I'm not really even disappointed. I basically expected this.
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