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25. NCUA allows Federal credit unions to offer payday alternative loans (PALs) that charge up to 28% plus a reasonable application fee, not to exceed $20, which in some cases could result in an APR in excess of 36%, as determined using the TILA methodolog

FAQ Question

25. NCUA allows Federal credit unions to offer payday alternative loans (PALs) that charge up to 28% plus a reasonable application fee, not to exceed $20, which in some cases could result in an APR in excess of 36%, as determined using the TILA methodology. Are such loans permissible for purposes of CDFI Certification?

FAQ Answer

Question PM15 in the revised Certification Application asks whether an Applicant originates, purchases interests in, offers, arranges, markets, or services any consumer loan products (including credit cards and purchased loans) that allow for an APR in excess of 36% when that rate is calculated using the MAPR (rather than TILA) standard. If any of the consumer loan products of the Applicant or its Affiliates, including a PAL, allow for a MAPR in excess of 36%, those loans must meet a set of additional standards (see Question 18) to be permissible for purposes of CDFI Certification.