Affin­ity pro­gram aim­ing to break pay­day loan cy­cle

Credit union, with help from United Way, to of­fer al­ter­na­tive through Restart Loan

Saskatoon StarPhoenix - - CITY + REGION - JEN­NIFER ACK­ER­MAN jack­er­man@postmedia.com

REGINA Any­one who has re­lied on a pay­day loan to sur­vive un­til their next pay­cheque knows how easy that can push a per­son far­ther into debt.

Of­ten, fam­i­lies don’t have enough time to get the money together in the two weeks usu­ally re­quired to pay back the loan and are dinged with ex­tra 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 break fam­i­lies out of the cy­cle and pre­vent oth­ers from fall­ing into it, Affin­ity Credit Union, with the help of United Way Regina, launched a new pro­gram Thurs­day called the Restart Loan.

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

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

“Hav­ing th­ese al­ter­na­tive op­tions that are much more pos­i­tive and ... al­low them to build credit and al­low them to build that fi­nan­cial knowl­edge, are so key to see­ing peo­ple thrive,” she said.

As an or­ga­ni­za­tion that works to con­nect in­di­vid­u­als and fam­i­lies with the ser­vices they need to thrive, United Way supports the credit union’s ini­tia­tive.

Ac­cord­ing to data col­lected from the United Way’s Saskatchewan 211 ser­vice, which re­cently ex­panded to al­low users to call, text or use an on­line chat fea­ture, 21 per cent of the ser­vices searched on the web­site were peo­ple look­ing for fi­nan­cial or in­come supports.

“It be­comes that cri­sis sit­u­a­tion when the choice comes be­tween if you’re go­ing to feed your chil­dren or pay your rent or if you’re go­ing to go fur­ther into debt,” said Nel­son.

“A lot of fam­i­lies are go­ing to choose to go fur­ther into debt so they can con­tinue to meet those ba­sic needs for their fam­i­lies,” she con­tin­ued.

“We know that by con­nect­ing peo­ple to supports, we’re giv­ing them an op­por­tu­nity to thrive and that’s what our friends at Affin­ity have done with the Restart Loan Ser­vice.”

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 per cent.

The longer terms of­fer more flex­i­bil­ity to pay back the loan and sig­nif­i­cantly lower fees than a tra­di­tional pay­day loan.

And where pay­day loans don’t help build credit, a Restart Loan will. The pro­gram comes in the wake of a small, but suc­cess­ful pi­lot project at three Saskatchewan branches in Novem­ber.

“We know that un­ex­pected ex­penses can pop up and when they do, they can af­fect an in­di­vid­ual’s abil­ity to man­age un­til the next pay­cheque ar­rives,” said Fred Khonje, com­mu­nity ad­viser at Affin­ity Credit Union and the lead de­vel­oper of the new pro­gram.

“We saw there weren’t many op­tions in the mar­ket­place for those need­ing a fast, short-term loan that didn’t have high fees at­tached to it,” he said.

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

In­di­vid­u­als can ap­ply for the new loan at any of the 56 Affin­ity Credit Union lo­ca­tions across the prov­ince.

In­di­vid­u­als will be re­quired to start an ac­count and have the op­tion of be­com­ing a mem­ber for a $5 re­fund­able fee. For more in­for­ma­tion visit affin­i­tycu.ca.

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