A first of its kind in the province, Affinity Credit Union has launched a new fast short-term loan designed to help individuals get out of the payday loan cycle and to prevent others from getting caught in it.
“Every one of our members is important to us. We know that unexpected expenses can pop up and when they do, they can affect an individual’s ability to manage until the next paycheque arrives. Our role, as a credit union, is to help our members navigate financial challenges. The Restart Loan was developed to assist members who are struggling with debt and credit challenges and to help prevent them from resorting to a payday loan out of desperation,” said Myrna Hewitt, Executive Vice President, Member Experience, Affinity Credit Union.
The Restart Loan offers individuals a more responsible and affordable alternative to high-fee loans. Borrowing amounts can range anywhere from $200 - $2000, with terms ranging between two and 24 months, at an annual interest rate of 17.99%. The longer terms give the borrower much more flexibility and the fees are significantly less than the fees associated with a traditional payday loan.
For example, if a member were to borrow $200 through a Restart Loan and paid it off after two weeks, it would cost that member $1.38 at an annual interest rate of 17.99%. By way of contrast, under Saskatchewan legislation the maximum that can be charged for a $200 payday loan is $34 ($17 for every $100 borrowed) for a two week period. Over the course of the year, the fees paid on this $200 loan would equal an annual interest rate of 442%.
United Way of Saskatoon and Area CEO Shaun Dyer believes Affinity’s Restart Loan will play an important role in helping break the grip of payday loans.
"Payday loans target people who can least afford them. They prey on people’s economic desperation by offering easy access to cash and no-hassle, quick fixes. But in reality, payday loans’ exorbitant fees end up pushing people further and further into financial despair and increase the burden of debt. Affinity’s Restart Loan is going to be a vital tool to help people break free of payday loans and find a path to financial stability,” said Shaun Dyer, United Way of Saskatoon and Area, Chief Executive Officer
Fred Khonje, Community Advisor at Affinity Credit Union, was the project lead on the development of the Restart Loan and points out that the Restart Loan is much more than a loan product.
“We offer advice and knowledge to each and every member, whether they’re coming to us for a mortgage, an investment or a Restart Loan,” said Khonje. “We care about our members and their financial success. The Restart Loan is intended be an important next step to building a strong financial future.”
The loan is designed to fit the unique needs of members, including those with low or no credit history, so they can meet their financial obligations while building their credit rating in the process.
“We all experience a bump in the road from time to time and some of us may need a short-term loan to get through until payday,” said Hewitt. “The Restart Loan is much more affordable and flexible than a short-term, small-sum loan, providing a way for people to avoid payday lenders altogether, or an exit strategy for those caught in the cycle of borrowing simply to pay off the last loan.”
According to Statistics Canada, 1/3 of Canadian payday loan users reported that they used sources other than their paycheque to repay their last loan. The launch of the Restart Loan comes after a six month pilot project in three Saskatchewan communities. It is now available in all Saskatchewan Affinity advice centres and through Affinity’s Contact Centre.
About Affinity Credit Union
Affinity Credit Union is a values-based, co-operative financial institution and the 7th largest credit union in Canada. With $6.5 billion in managed assets Affinity has the largest credit union branch network in Saskatchewan with 56 locations in 47 communities. It offers access to a complete range of accounts and services and is a leader in delivering digital banking solutions to its members.
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Affinity Credit Union