Mutual Aid Fund: reversing the lending trend
By Debbie Nelson, DNA Creative Communications
Photography by Amy Randall Photography
Have you ever paid 175% interest on a loan? Unfortunately, many people in our community are faced with this reality. Recently, Iris Burdine, 70, found herself in this situation and did not know where to turn.
Iris’s story could happen to any of us if we’re not careful. Several months ago her car died and she needed transportation. Estimates for the repair of the vehicle were plentiful and she had no financing option. Thus, Iris visited several used car fleets to find an affordable vehicle. In the end, she found a used Chevrolet with over 70,000 miles and a sticker price of $ 9,595. Before it was all said and done, the dealership added other charges totaling over $ 15,000 for a car valued at $ 7,000.
And that’s where the story begins. To add context, Iris is retired and lives off her monthly Social Security check of $ 752. Now, with the car payment, she had to pay $ 445 of her monthly income. While the first month went well, the second month Iris was unable to keep up with the payments. This forced her to borrow money to pay for the car. =
Across Greenville, you can find storefronts with bold signs offering quick loans and check cashing. These businesses are typically located in areas where people are unbanked and have limited banking options. When Iris couldn’t make payment for her car, she visited one of these places. Within minutes, Iris came out with a loan of $ 1,735, adding a payment of $ 275 per month. This equates to over 175% interest and Iris with just $ 30 a month from her Social Security check.
Who can you turn to if this happens to you? In Iris’ case, she found a solution when she stopped at Self-Help Credit Union. Self-Help is a non-profit financial institution that has worked to build stronger communities and economic opportunities for all since 1980. Today, the organization has over 150,000 members with branches in seven states across the country. In Greenville, Self-Help is located at 115 Antrim Drive.
Self-Help provides responsible financial services, lends to small businesses and nonprofits, develops real estate, and promotes fair financial practices. While the organization benefits communities of all kinds, it focuses on those that may be underserved by conventional lenders, including people of color, women, working families, rural residents, and families and communities in need. low income.
Iris had definitely found the right place! She met the Self-Help Loan Officer, David Finley, who helped her refinance these loans. Iris actually has a good credit rating, which positions her for a good interest rate. Today, her total monthly loan payments have been reduced to $ 296.13 from $ 721.09, leaving her with $ 494.87 from her monthly Social Security check. Instead of paying 175%, she now pays 12.9%.
Additionally, Self-Help referred Iris to the Greenville Financial Empowerment Center to start working with a financial education coach to help her avoid predatory institutions and start developing healthy saving habits. It’s a success for Iris; However, predatory lending practices continue to impact so many innocent people in our community and across South Carolina.
In order to get to the root of the problem, Self-Help is now working on guarantees for the citizens of South Carolina. Predatory payday loans are a relatively new product that has arrived in most states over the past 25 years. While some states have never allowed payday or car title lenders to trap their citizens, others, such as North Carolina and Georgia, have ended the practice. In November, state representative JA Moore of the counties of Berkeley and Charleston pre-tabled a bill called the SC Predatory Practice Protection Act.
The bill would require a short-term lender to provide a financial literacy course before granting a loan or undertaking collections after a default. It would also require a lender to establish a good faith belief that the borrower can afford the short-term loan based on certain factors, which may include an income and expense review, and set a limit for the rate. annual percentage for a short period. term loan. This legislation is an important first step, and Self-Help Credit Union is ready to work closely with religious, community and veteran partners to strengthen the bill and help pass it.
While we wait for our lawmakers to take action on this bill, Iris shares advice with others who might be facing outrageous interest rates offered by predatory lenders: “It’s hard to think when they’re rushing you. to make a decision. These people know how to talk, and they make their loans sound good. Always take your time and talk to others about the other options. A credit union, like Self-Help, is the best place to go. You can trust them. “
“Unfortunately, Iris’s story is far too common. We work every day with people who are faced with reverse loans,” says Kerri Smith, City Manager of Self-Help-Credit Union in Greenville. “South Carolina lawmakers, please pay attention to what’s going on in our state. We must end this exploitation of our citizens, especially the elderly. “
For more information on Self-Help Credit Union, please visit them at 115 West Antrim Drive in Greenville or online at www.self-help.org/locations/greenville-branch or call 864) 438-2421.
Debbie Nelson is President of DNA Creative Communications, an inspiring marketing and public relations firm for nonprofit organizations. She is the founder of the nonprofit Shine the Light forums in the upstate and state level, she coordinates the knowledge network of Together SC.
Thank you to the thousands of nonprofit leaders and board members who have participated in the Shine the Light forums for nonprofits over the past 10 years. To learn more about our upcoming offers, please visit www.nonprofitforums.org.