Credit Union Launches New Program to Help Break Payday Loan Cycle


“Having these alternative options which are much more positive and … allow them to build credit and allow them to gain this financial knowledge, is so essential to seeing people thrive.”

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Anyone who has relied on a payday loan to survive until their next paycheck knows how easily it can push a person into further debt.

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Often, families do not have enough time to raise the money in the two weeks it usually takes to repay the loan and are plagued by additional fees and high interest rates.

This system can create a vicious cycle in which more loans are taken out to repay previous loans, keeping families in poverty.

In an effort to take families out of the cycle and prevent others from falling into it, Affinity Credit Union, with help from United Way Regina, on Thursday launched a new program called the Restart Loan.

Similar to a payday loan, those who apply for it often get their loan in an hour, but have two to 24 months to pay it off at lower interest rates.

“One thing we know about poverty in Saskatchewan is that people tend to stay there longer than in the past,” said Kristen Nelson, associate director of community impact for United Way Regina.

“Having these alternative options which are much more positive and… allow them to gain credit and allow them to gain this financial knowledge, is so essential to seeing people flourish,” she said during an announcement at the Rochdale branch of the credit union.

As an organization that strives to connect individuals and families with the services they need to thrive, Centraide supports the credit union initiative.

According to data collected by United Way’s Saskatchewan 211 service, which was recently extended to allow users to call, text or use an online chat feature, 21 percent of the services searched on the website were for people seeking financial or income support.

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“It becomes this crisis situation when the choice is between whether you’re going to feed your kids or pay your rent or whether you’re going to take on more debt,” Nelson said. “Many families will choose to take on more debt so that they can continue to meet their families’ basic needs.”

“We know that by connecting people to support services, we give them the opportunity to thrive and that’s what our friends at Affinity have done with the Restart loan service,” he said. she declared.

The loan amount can range from $ 200 to $ 2,000 with terms ranging from two months to two years at an annual interest rate of 17.99 percent.

The longer terms provide more flexibility in repaying the loan and significantly lower fees than a traditional payday loan.

And where payday loans don’t help create credit, a restart loan will. The program follows a small but successful pilot project at three Saskatchewan branches in November.

“We know that unforeseen expenses can arise and, when they do occur, they can affect a person’s ability to manage until the next paycheck arrives,” said Fred Khonje, Community Advisor at Affinity Credit Union and main developer of the new program.

The program aims to help families struggling with debt and credit and prevent them from resorting to a payday loan out of desperation.

“We saw that there weren’t a lot of options in the market for those who needed a quick, short-term loan that didn’t come with high fees,” he said.

Khonje said the application process was designed to be fair, fast, easy and non-judgmental.

Individuals can apply for the new loan at any of the province’s 56 Affinity Credit Union locations. Just visit the branch advice center and meet with a lender to determine the loan amount needed.

Individuals will need to open an account and will have the option of becoming a member for a refundable fee of $ 5.

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