The following is taken from the FTC Consumer Alert titled "Payday Loans = Costly Cash":
"Get Cash Until Payday!...$100 or more...Fast!"
The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans - which come at a very high price.
Check cashers, finance companies, and other are making small, short-term, high-rate loans that go by a variety of names: payday loans, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.
Usually, a borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee.
A cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Let's say you write a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying the $115 in cash, or you roll-over the check by paying a fee to extend teh loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391% APR.
Do you have an alternative? YES!
Credit unions across Montana offer small loans - typically $500 and sometimes even smaller - to its members. Reach out to your credit union to meet your short term loan needs rather than taking out a payday loan.
Many credit unions are offering a specific payday loan alternative product for borrowers that do not quality for other more traditional loan products due to past credit history.
Each credit union has its own loan policy, but the following credit unions have developed a specific loan product to help members avoid the payday loan debt trap. They are:
- 1st Liberty Federal Credit Union (Great Falls, Conrad, Cut Bank)
- Bear Paw Credit Union (Havre, Shelby, Chinook, Sunburst, Chester)
- Family First Federal Credit Union (Great Falls)
- Kootenai Valley Federal Credit Union (Libby)
- Lincoln County Credit Union (Libby, Troy, Eureka)
- Missoula Federal Credit Union (Missoula, Stevensville)
- Montana First Credit Union (Missoula)
- Park Side Federal Credit Union (Kalispell, Whitefish, Columbia Falls)
- Ravalli County Federal Credit Union (Hamilton)
- Sky Federal Credit Union (Bozeman, Livingston)
- Mountain West (Butte)
Additionally, the following credit unions can provide free alternatives to the expensive tax refund anticipation loans offered by many storefront tax perparers. Applicants must qualify for the VITA program to be eligible.
- Great Falls Teachers FCU (Great Falls)
- Valley FCU (Billings)
Even if your credit union is not listed above, ask them about short-term small loan options before seeking credit from a payday or title loan company.
As not-for-profit financial cooperatives, credit unions' sole purpose is to provide financial services to its members at an affordable price.
Remember to try your credit union first! |
