Catholic nonprofit offers Ohio borrowers an alternative to payday lending
Inside Subprime: March 22, 2018
By Caroline Thompson
With more than 1,300 payday lending locations scattered around the state, Ohio residents who are short on cash and credit may be tempted to take out a high-interest, high-risk payday loan. This is a bad idea no matter where you live, but Ohio payday lenders have some of the highest interest rates in the country, meaning borrowers in the Buckeye State could end up paying more than 500 percent APR when all is said and done.
Turning to payday loans can trap already financially-strapped Ohioans in a cycle of debt that can be nearly impossible to get out of. That’s why The Society of St. Vincent de Paul Diocese of Columbus, a nonprofit agency run by the Catholic church, is stepping in to help. The Licking Country de Paul MicroLoan Program allows Ohio residents to take out loans of up to $500, which feature lower interest rates and longer terms than those offered by predatory lenders in the state.
Though run by a Catholic charity, this program is open to people of all faiths, and it is able to fund these loans through a partnership with a local credit union. According to an article in the Columbus Dispatch, when a borrower comes in looking for a loan, they will be accompanied to the credit union, where a representative of St. Vincent de Paul sets up an account for the borrower and pays the membership fee.
“After a credit check, which does not determine eligibility for a loan, the credit union loans the money to the individual and puts a hold on St. Vincent de Paul’s account in the amount of the loan. If the individual defaults, the society assumes the risk. If not, the principal amount eventually is returned to the society. The credit union administers the loan, which is reported to credit reporting agencies.”
“We were excited to be a part of it because it falls in line with our mission and credit union philosophy of people helping people,” said Laura Roberts, CEO of Chivaho Credit Union in Ross County, Ohio. “It’s important to us to teach and educate our members about making better financial choices.”
In addition to offering low-interest, longer-term loans to Ohioans in need, the program also provides financial counseling and mentorship programs that can help borrowers improve their economic outlook as they work to pay back their loans.
“This is all part of driving for systemic changes in poverty,” said Jim Jackson, a board member for the Licking Country program. “It’s not the whole solution, but it’s part of the solution.”
Want to learn more about payday lending in Ohio? Check out these related pages and articles from OppLoans:
- Payday Loans: The Most Dangerous Debt Trap
- How to Take Out a Payday Loan in Columbus
- Payday and Title Lending in Cleveland