A total of 43 out of 61 CFDCs (or 70%) responded to the survey.  (Note:  at the time of the survey, prime rate was 4%)
1.  What interest rates are you charging right now?
Rates of 6.75% to 9% – 12 CFDCs (or 28%)
Rates of 8.5% to 12% – 11 CFDCs (or 26%)
Rates of prime plus 1.75% to 5% (5.75% to 9%) – 20 CFDCs (or 46%)

2.  Are you planning to, or have you lowered your interest rate in the past month?
No – 14 CFDCs (or 32%)
Don’t know/Under consideration – 6 CFDCs (or 14%)
Rates fluctuate with prime – 15 CFDCs (or 35%)
Yes – 8 CFDCs (or 19%)
If yes, to what?  Three said to 7.75%, one to 6.75, one to 8.5%, two to 6%, one said from fixed to floating

3.  Does your rate fluctuate with prime rate (i.e. prime plus 3)?
Yes – 24 CFDCs (or 56%)
No – 19 CFDCs (or 44%)
If so, do you change it throughout the duration of the loan?  Comments ranged from “yes, weekly”, “monthly”, “not for duration”, “annually”, “twice a year”, “perhaps”, “only at renewal” (8), “change monthly , but doesn’t effect existing loans”, “every 2 years”, and “longer term higher rate, shorter term lower rate.”

4.  Do you have loans out at many different rates?
Yes – 39 CFDCs (or 90%) (3 said they only have 2 different rates)
No – 4 CFDCs (or 10%)

5.  Do you have any additional comments about setting interest rates?
• Risk adjusted is industry standard and can be used as an incentive for the client to act to reduce risk and interest costs.  Good discussion tool with
client
• Have some social economy loans at 5%
• All our clients are high risk 

• Rates should reflect market trends
• Various rates, couldn’t do this without TEA
• When we lower our rate, we don't inform the existing loan clients but if they come to us with a request for a better rate, we will consider it based on their payment performance
• Some CFs charge more if the deal is risky.  We don't, as long as collateral is there, we charge the going rate
• System of prime plus 2 to 4 has worked well for us
• We set interest rates on a client-by-client basis
• We will do fixed or floating rates depending on the client’s preference

If you have any questions about items you have read in this update or any other OACFDC activities, please feel free to call our office at 888-633-2326