Local nonprofit teams up with banks to provide payday loan relief in Missouri
Inside Subprime: May 4, 2018
By Lindsay Frankel
Residents plagued by high-interest rates on payday loans in Columbia, MO are now eligible to receive payday relief loans with zero interest, thanks to a project led by local nonprofit Love INC. The organization is partnering with five local banks to offer relief to individuals who enroll in their Extra-Mile coaching program, which provides four months of free financial guidance and budgeting assistance. After four weeks in the program, applicants are eligible to receive a zero-interest loan with a monthly processing fee of only $8.33.
The average annual interest rate on a payday loan in Missouri is 452 percent, which traps low-income individuals in a cycle of debt when they can’t cover their expenses. Candy Richerson, a volunteer at Love INC, became concerned with the predatory high interest rates when helping a client to manage a payday loan. Richerson, who works at First State Community Bank, brought the issue to the attention of bank president Joe Miller, who was eager to help.
After providing an interest-free loan to Richerson’s client, Miller and Richerson were inspired to help others with similar plights. Miller held a meeting with other local bank presidents, community members, and Love INC representatives to respond to the struggles of low-income Columbia residents. The project now has $20,000 in funding from the five participating Columbia banks along with donations from community members.
Kelli Van Doren, coordinator for the Extra-Mile program at Love INC, noted that about a third of program participants struggle with debt from payday loans. “It’s devastating because the people that come in here are working full time and they’re working hard, but they just can’t meet their expenses,” she said.
Graduates praise the program and its coaches, citing higher credit scores and better money management skills as indicators of success. One participant even saw a credit score jump from 420 to 706 by the end of the four-month program.
The new project offers an incentive for payday loan borrowers to stay in the Extra-Mile program and get the help they need, and the interest-free loans offer Columbia residents a manageable way to get out of debt.
Individuals with bad credit in Columbia often turn to payday loans when they lack access to alternative solutions, but borrowers should be aware of the predatory high interest rates that perpetuate the cycle of debt for low-income individuals. While the new project will offer welcome relief to Extra-Mile participants already trapped in debt, borrowers should also seek alternatives to payday loans in Columbia whenever possible to avoid budget distress altogether.
To learn more about payday loans in Missouri, check out these related pages and articles from OppLoans: