Members of six credit unions in Lincoln, Neb., will have another way to meet their need for short- term, low-dollar loans after their CUs joined together to start offering an alternative to more expensive payday loans offered elsewhere.
“Members will now be able to apply and qualify for a $500 small loan with an annual percentage rate (APR) of 18% with a payback term of 60 days in a fast and convenient way without the hassle of a credit report,” said Dale Springer, CEO of the $70 million Peoples Choice FCU.
Under the program, credit union members are required to provide proof of income and by federal regulation, are required to be, or have been, a member of the respective credit union for at least 30 days to qualify for the loan.
In addition to Peoples Choice, the five other credit unions currently offering the Credit Union QuickCash program include the $145 million Liberty First CU, the $41 million LincOne FCU, the $80 million MembersOwn CU, the $23 million Nebraska State Employees CU and the $75 million University of Nebraska FCU.
More Lincoln credit unions may decide to offer the program in the near future and the Nebraska Credit Union League has said it hopes the program will spread across the state.
“Credit Union QuickCash is a reasonable alternative to high-interest, small-dollar loans that yield a financial benefit while serving the needs of the community,” said Scott Sullivan, CEO of the Nebraska Credit Union League.
“In addition to the small loan, members will have access to financial education and financial counseling at their credit union if they would like to take advantage of it,” Sullivan said.
The credit unions cited data that shows the average payday loan in Nebraska has up to a 460% annual percentage rate on a $500 loan with a payback term of up to 34 days. The payback term of the Credit Union Quick Cash loan will be 60 days with no prepayment penalty for members wishing to pay off the loan early.