Credit union offering cheaper alternative to high-interest payday loans
Charging less than 2% compared to the maximum 17% allowed under Sask. law for a 2-week loan
There is now a cheaper alternative for people in Saskatchewan looking to borrow some cash until their next payday.
Affinity Credit Union says it has a cheaper interest rate for loans — they can offer short-term loans of $200 with an interest of $1.38 for that loan, compared to the industry standard rate of $34. The credit union will grant loans up to $2,000 but you will have to open an account with Affinity.
High-interest payday loans can be a particular challenge for people in poverty, said Kristin Nelson, associate director of community impact for United Way Regina.
"When people access those high-interest payday loans, it can really continue that cycle and it keeps people in poverty longer," Nelson said.
Under current Saskatchewan law, companies can charge 17 per cent on a two-week loan — meaning if you borrow $100, you pay back $117.
The convenience of a payday loan is often what makes them so appealing, Nelson said. Payday loans are speedy and don't have many barriers other than a pay stub.
But if you aren't able to pay the loan back within those two weeks, more has to be paid back.
Affinity will offer customers up to four months to pay back loans in some cases, according to Fred Khonje, community adviser with Affinity.