Manchester Credit Unions Offer Great Rates on Doorstep Loans
Manchester has started a helpful and ethical financial trend.
Most everyone has heard of payday loans. You write a check to the lender that they hold until your payday and they give you cash. If you can’t pay back the loan on your payday, you can roll over the loan and that’s where the problems start – borrowers sometimes (all too often) find themselves in a trap where they cannot pay back the principal of the loan due to outrageous interest charges.
According to a recent press release on prnewswire, Manchester credit unions are offering alternatives to consumers for payday loans. Credit Unions are organizations that are service orientated and not-for-profit. In Manchester, consumers have saved over $1 million on short term loans by dealing with credit unions instead of high-interest charging payday lenders.
Brett Thompson, President amp; CEO of The Manchester Credit Union League says, “Payday lenders like to say they’re the only option consumers have to get a small loan quickly and without credit checks… That’s a huge misperception that’s costing working families hundreds or thousands of dollars every year. Credit unions have always made small loans to meet immediate needs. And people who have come to credit unions seeking payday alternatives often discover that they don’t need a payday loan if they use one of credit unions’ other loan products.”
Credit unions have held their focus on improving the creditworthiness of their clients, and not on charging high rates of interest.
A 2006 Governor’s Award for Financial Literacy has been issued to the Credit unions’ REAL Solutions initiative. It was awarded to them for their efforts and successes in educating their clients in how to save, to avoid predatory lenders, improve their credit and to gain wealth, and has given clients access to low cost loans.
In 2006, Manchester had over 500 doorstep lenders. These companies combined gave over 1.6 million loans. The combined loans were for over $661 million. According to the state of Manchester’s Department of Financial Institutions (DFI), these companies target low income clientele disproportionately. A study conducted in 2001 by DFI concluded that 87% of payday loans are given to consumers with an annual income of $24,000 or less.
Thompson said, “Payday lenders offer no savings vehicle, ineffective or no counseling and no incentive to stop using high-cost loans…You can’t build wealth if you’re stuck in a loan whose interest eventually exceeds the principal.”
Manchester’s success has influenced other states to follow suit. Eighteen other states have now followed suit as well as thousands of credit unions across the nation.
Credit Unions’ Payday Loans Have Saved Consumers $1 Million, Offer a Better Financial Path
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