More people can avoid costly payday loans in Red Deer with the introduction of a new loan program at Servus Credit Union.
With Fast Forward Small Loans, Servus members can get $200 to $2,500 at 19 per cent interest in under an hour when they make an appointment, with no fees, flexible payment options and two months to two years to pay it back.
The program is for people who are employed with a credit score of over 600. Those with less will be considered, but it will take longer to approve.
Nazim Manji, branch manager with Servus Credit Union in Clearview Ridge, said Fast Forward was introduced Oct. 1 after the province identified the need for less expensive lending solutions.
“We’ve had 300 applications to date throughout the whole Servus company and we’ve approved 90 per cent just on the one-hour program,” Manji said at an event hosted by Central Alberta Poverty Reduction Alliance on Thursday looking at alternatives to predatory payday lending.
Red Deer City Coun. Ken Johnston said annualized costs of payday loans are close to 300 per cent so 19 per cent at Servus is vastly superior and a huge positive.
“We have a mainstream lender that is now involved in the business, that’s now taken a front and centre position for a market that basically was under-banked or unable to be banked by the mainstream,” Johnston said.
Provincial legislation recently reduced payday borrowing fees from $23 to $15 per $100 loaned, along with other changes.
Manji said seven people have already applied for Fast Forward loans at his branch and they appreciate dealing with a financial institution that will work with them to build emergencies funds to break free of the payday rut.
“It’s not just about getting over this one little hiccup and hopefully you’ll be on your feet next month. We know that doesn’t that happen because the bills don’t stop. The bills continue,” Manji said.
Johnston said seniors who have a fixed income and don’t work are a group that would benefit from easier access to loans.
“There are plenty of seniors that are asset rich, cash poor. Seniors were the fastest growing market for payday lenders in this country in the last 10 years. That tells you they’re under-banked and under-serviced,” Johnston said.
A Servus official said retired seniors would not automatically be disqualified for Fast Forward loans.