New Alternative to Payday Loans Kicks Off in Woonsocket

What is the Payday Alternative Program?

Charging upwards of 260% APR, payday lenders take advantage of the fact that low-income communities and families lack access to affordable financial services, such as those offered by banks, credit unions and credit cards.  Supported by United Way of Rhode Island, our Payday Alternative Program offers credit building, small dollar loans of $300 to $500 with an interest rate of 30% APR and a term of 12 months. In order to encourage financial literacy and promote asset building so that loans can be avoided in the future, our services connect clients with financial coaching resources at our partner organization sites, NeighborWorks BRV, Family Resources Community Action, and Connecting for Children and Families. 

How is this loan different than a payday loan?

Rhode Island is the only state in New England without a cap at 36% APR for payday loans, allowing predatory lenders to offer loans at 260% APR on two week terms. This means that borrowers have two weeks to pay back the loan or it is ‘rolled over’ – leading to more interest and fees. As a result, the profitability of the industry is dependent on a loan structure that makes it likely the borrower will be unable to pay off the loan when it comes due. 

Our small dollar loans are offered at a fixed 30% APR on a term of 12 months. Along with saving money that otherwise would have been spent on interest, the structure of these loans will help borrowers build their credit. In addition, we match our clients with financial coaching resources in the community, so that borrowers are met with the tools necessary for planning financially secure futures.

How do I fill out an application for a loan?

Applications can be filled out at our Woonsocket branch office. We strongly prefer that clients make an appointment or reach us by phone. If you are unable to reach us, please leave a message and we will return your call as soon as possible

Are there any pre-qualifications?

Clients must:

·       have a bank account

·       reside in Rhode Island

·       have some form of income, be if from employment, public benefits, child support, etc.

For more information or to set up an appointment, contact Jane at 866-584-3651 ext 300, jane@capitalgoodfund.org