The perks of a 0% loan: Why a dozen lenders are trying it out

A dozen credit unions are offering their employees (and, in some cases, employees elsewhere) a 0% loan to cover emergency expenses. There's no catch either. Quite the opposite: Those who pay off the loan over 12 months as prescribed and sock away some money in a savings account can earn a cash reward. A nonprofit called the Community Impact Fund is behind the no-interest, no-fee loan product, which is intended to help people avoid using payday lenders or taking money out of their 401(k) accounts. The nonprofit says it also aims to help credit unions stand out. Hear from four credit union leaders who say they like the product.

Credit unions are finding a lot to like in a zero-percent loan product developed by a Colorado nonprofit called the Community Impact Fund. More than half a dozen credit unions nationwide have rolled out the product, primarily for their own employees.

The challenge lies in bringing the loan — and its benefits to borrowers — to a wider audience. Credit union leaders say they are considering various approaches to offering the loans in their communities but that they also want to ensure the product works as advertised.

“This thing can”t blow up in our face,” says Doug Chambers, president and chief executive of Lookout Credit Union in Pocatello, Idaho, which introduced the zero-percent loan to employees in November 2022. “It has to be something that we know backwards and forwards.”

When Lookout came across the Community Impact Fund, it had been searching for a product and a partner that could help reduce people’s need for high-interest lenders, says Chambers. The loan product from the fund comes close to what Lookout had in mind, he says. “So it was an easy, smooth partnership with them.”


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