In the competition for new loan customers, New Haven-based UIL Holdings sees an opportunity to further market its natural-gas heating business.
UIL announced last week it is jointly marketing a personal loan product of Bridgeport-based People's United Bank to help people convert to natural gas.
"We are pleased to work with People's United Bank to help consumers who want to reduce their home heating costs by converting from oil to natural gas at a time when homeowners are looking at every aspect of their household expenses," Tony Marone , vice president of Business Services for UIL Holdings, said in the press release. "Energy costs related to home heating can be the largest part of a family's budget. The affinity financing program can allow them to include the cost of conversion in their budgets, and in many cases, the savings from conversion to natural gas will pay for the cost of financing."
In November 2010, UIL closed on a $1.25 billion deal that included the acquisition of Southern Connecticut Gas and Connecticut Natural Gas from Spain's Iberdrola. While the deal has helped UIL boost revenue, executives told analysts in May there is tremendous opportunity to expand the business as only 37 percent of homes connected to SCG and CNG mains use gas to heat their homes.
One issue confronting UIL's push to expand its customer base is the cost of converting homes to natural gas. Estimates from several companies listed as installers ran from $7,000 to more $10,000. Several variables impact the cost of the conversion, but an economy with high unemployment and stagnant wage growth isn't helping, despite a potential savings in heating costs.
Natural gas futures contracts are down $1 from last year and more than $2 from 2009 while contracts for oil were up $10 from a year ago and $20 from 2009, according to the U.S. Energy Information Administration .
Valerie Carlson, a People's United spokeswoman, said the loan program is not a new product, but an addition to an existing business.
"They're personal loans, part of the product line," she said.
Qualified borrowers could see interest rates of 6.99 percent if they have a People's United account, or 7.99 percent for those who are not already banking customers.
The interest rate is much lower than many credit card offerings, after introductory rates of zero percent end.
According to Bankrate.com, the average low-interest credit card in America is about 10.76 percent.
People's isn't the only bank trying to bring in new customers with its personal loans at competitive rates.
Webster Bank listed rates for personal, unsecured home improvement loans of 8.99 percent and had credit lines as high as $20,000.
Wells Fargo, assuming a borrower qualifies, is offering a rate of 9.66 percent for a $10,000 unsecured personal loan and is marketing its products as a way to pay down high-interest debt.
Credit unions are also offering low rates on personal loans. General Electric Employees Federal Credit Union, open to not just GE employees, is offering personal loan rates ranging from 7 percent to 9.99 percent, depending on the length of the loan as well as other criteria.
To contact the reporter on this story, call 203-330-6216; write rvarnon@ctpost.com; or follow him at twitter.com/RDVarnon.
