Payday Loan Alternatives
When the going gets tough and there’s just not enough money to cover everything, many people turn to payday loans or car title loans for a quick fix. What they don’t realize, however, is that these types of loans charge exorbitant fees and can quickly lead to an increase in debt, rather than relief from it.
According to the Federal Trade Commission, payday loans are often borrowed in amounts of $500 and under, typically for two to four weeks, and carry fees of $15 for every $100 borrowed (which amounts to an annual percentage rate of 391%). A personal check, written for the entire amount of the loan plus fees, can be cashed by the company if the loan is defaulted upon.
Car title loans work in a similar fashion, except a vehicle title is used for collateral. Loan amounts can be as high as 25% to 50% of the car’s value. Monthly finance charges are typically 25% (an APR of 300%).
If the loan cannot be paid in the specified amount of time, a rollover may be offered. This may sound like a good thing, but you are charged fees for another month. If this happens several times, you can quickly become mired in debt to the very company you turned to in the hopes of easing your debt.
At Midwest Members Credit Union, we offer alternatives to these types of loans. Our signature loan and signature line of credit both carry low annual percentage rates.
The signature loan allows you to borrow up to $3,000 for a term of 24 months with equal monthly payments. The signature line of credit offers a maximum amount of credit, and you may use as little or as much of it as you wish, paying interest and making monthly payments only on the amount you borrow.
Everyone needs a little help sometimes. We understand that and will do all we can to help you successfully navigate this difficult time.