Alternatives to small, short-term loans are available
May 14, 2006 - Nashua, New Hampshire
Peter Hildreth doesn't want to take sides on the payday lending issue, but he does say there needs to be alternatives to cash-advance storefronts.
"The people who are taking these loans need to take a loan," said Hildreth, commissioner of the New Hampshire Banking Department. "If a person in that situation needs to fix his car so he doesn't lose his job . . . how are the people who need these loans going to get a loan?"
In the Nashua area, Triangle Credit Union is one alternative.
Triangle offers loans as small as $200, said Maurice Simard, president of the credit union. All a person needs to do is become a member of the credit union and deposit a $25 membership fee, he said.
"We do serve people with very little means," Simard said. "We even have an amount of money we set aside for people that are in trouble with heating or eviction. We'll give them $200 to $300 to get by. It's not a donation, it's a loan."
Members pay between 6 percent and 13 percent annual percentage rate on small loans, depending on the person's credit history, Simard said.
People with poor credit history are the only people who don't qualify for loans. Most people who apply for the small loans don't have any credit history, and they get the loan, but are charged about 13 percent, Simard said.
"If they have nothing, we'll take a chance and do something for them," Simard said. "They can do business with us, and they don't have to pay the 500 percent (charged by some payday lenders)."
And word is getting around about the small loans. "What I'm finding is, people of other nationalities--Spanish or Bosnian--they don't know much about financial institutions, so I think it's a matter of education," Simard said. He said Spanish-speaking clientele has doubled over the past year.
Triangle began offering small loans in 1998, when it changed from a federal to a state charter and became a community credit union instead of a credit union for companies.
Terms of the small loans are usually six to 12 months.
Check 'n Go spokesman John Rabenold said payday lenders not only fill a need, but will also continue to grow.
"People use the service because they've generally been stung by banks or credit unions for bounced-check fees," Rabenold said. "They don't want to go back there again."
The situation is unfortunate, Hildreth said.
"The credit unions have (small-loan programs)," Hildreth said, "but their problem is, people ride down the street and see this yellow (payday lender) building and say, 'I'm going there.' "
The Telegraph, Karen Spiller, Telegraph Staff
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