And as the lender, you get to set the parameters for your holiday loans, so if you aren’t making the profit you want from them, change something.
Right now, most holiday loans have rates that run between 6 and 12 percent, and include principal amounts ranging from a minimum amount of $500 to $12,000 or more. Borrowers typically have 12 month to repay their loans.
Some institutions also require loan proceeds to be deposited directly into a checking account, so if the borrower doesn’t have one, it’s an easy cross sale. Monthly payments are automatically pulled from this account, so this also helps keep accounts active and loans current.
To give your holiday loan promotion an added punch, consider creating a local business tie-in.
For example, in your ads, you could feature products that people often buy for holiday gifts, and you could ask your local retailers to set up displays in your lobby and branches. During the second week of November, you could have a kayak and canoe display, sponsored by a local sporting goods store. You could also ask the retailer to provide a special promotional price for borrowers, and include a sample loan repayment schedule. Then, set up a different display each week through the holidays.
You get a loan, the local retailer gets a sale, and the borrower purchases a gift that someone will always remember!
To market holiday loans, we recommend that you focus your ads on what people typically buy for Christmas gifts.
To illustrate, here are five common gift categories:
1) Computers and technology. This category includes desktop computers, laptops, phones, iPads, headsets, televisions, gaming equipment, mobile phones, and security systems.
2) Transportation. Today, $10,000 can buy a decent second car, a Vespa scooter, a kayak, or a four-wheeler.
3) Fitness equipment. Almost every family has a member who wants a treadmill, rowing machine, exercise bike, or an annual membership to an upscale fitness center.
4) Vacations. Trips can range from a family vacation at Disney World, to an ice fishing trip in Minnesota.
5) VISA® gift cards. These cards are extremely popular with shoppers, as well as the people who receive them as gifts. Also, from your institution’s perspective, a gift card adds another sale besides the loan.