Community Savings launches Express Loans, a fair rate alternative to predatory payday loans
July 10 2024 - 12:00PM
Community Savings, a purpose led BC credit union, today announced
its fair rate alternative product to payday lending – the ‘Express
Loan’. The product provides the lowest interest rates in BC for
short-term loans.
A recent poll of over 800 BC residents,
conducted by Community Savings Credit Union, shows that 8 in 10
respondents are often stressed about inflation and the rising cost
of living. According to additional research, there is a growing
trend of BC consumers increasingly resorting to payday loans to
make ends meet. Access to quick cash in the form of short loans
makes living pay-check to pay-check easier. However, payday lenders
unfairly target economically stressed or low-income borrowers by
charging unethical and exacerbated rates that create financial
inequities and unbreakable debt cycles.
The research conducted by Community Savings also
indicates that over half of BC residents (57%) do not know what an
‘APR’ (Annual Percentage Rate) entails – and yet payday lenders
rely on this language to describe interest rate charges. Awareness
is particularly lower among low-income individuals, with 68%
unaware of what APR means. This means many consumers underestimate
the interest they will be paying, and payday loans trap them into a
cycle of debt.
Community Savings is on a mission to drive
predatory payday lenders out of business in BC and help consumers
break free from debt cycles by providing a fair-rate alternative
product. The Express Loan product features an industry-first model
that is designed to be non-profit - if any profits are generated
from the Express Loan program, Community Savings will redistribute
them to borrowers annually.
“Payday loans create a destructive lending cycle
that drives families in BC into long term debt. When life happens,
we are here to help current and future members with an affordable
same-day service for emergency situations and financial advice to
help members step off the payday loan cycle.
Our end goal is to end predatory payday lenders
and their unfair rates and fees. We are committed to providing a
fair-rate alternative for members in need with a first-of-its-kind
program designed to generate no profits from it for the credit
union - If there is profit from delivering this product, those
excess funds will go back directly to program participants
annually” said Mike Schilling, President and CEO, Community
Savings.
The Express Loan offers a 17.5% fixed interest
rate for short-term loans of up to $2,500. The difference in
interest consumers will pay between Community Savings’ Express Loan
program and other payday loans is stark. For every $1,000 borrowed
for a same-day loan over a 14-day period, a consumer can expect to
save $143.29 with Community Savings’ Express Loan
over payday lenders.
|
Community Savings |
Other BC Payday Lender* |
Loan Amount |
$1,000 |
$1,000 |
Repayment Period |
14 days |
14 days |
Total Cost of Borrowing |
$6.71 |
$150 |
Total Amount to be Repaid |
$1,006.71 |
$1,150 |
Community Savings Credit Union is calling on
other short-term lenders to pivot away from jargon like APR. They
are urging the use of dollar amounts to show consumers the true
cost of interest on their loans. This is a proven behavioural
science intervention that uses psychology and economics to improve
consumer decision-making. In Texas, this method led to a 12%
reduction in payday loan volume.
If you’re a consumer looking for a financial institution that
provides a fair alternative to payday loans, get in touch with
Community Savings Credit Union:
https://www.comsavings.com/you/get-a-loan/express-loan
About Community Savings:Community Savings
Credit Union is driven by its purpose to unite working people to
build a just world. As BC’s largest fully unionized credit union,
Community Savings provides best-in-class personal and business
banking.
Community Savings operates six branches across the Lower
Mainland and Victoria. It lives by its values, from being the first
financial institution to become a Living Wage employer in 2010 to
winning the 2022 BCBusiness Business of Good Workplace Wellness
Award for its innovative staff wellness programs. For more about
Community Savings, visit www.comsavings.com.
Methodology:These are the findings of an online
survey conducted by Community Savings from June 13 to June 20,
2024, among a representative sample of n=808 Canadians living in BC
age 18+ who are members of the Angus Reid Forum. The survey was
conducted in English. For comparison purposes only, a probability
sample of this size would carry a margin of error of +/-3.5
percentage points, 19 times out of 20.
*Source: MoneyMart
https://www.moneymart.ca/loans/cash-advance
Media Contact:Yulu Public
Relationscscu@yulupr.com