We’ve all been there. It’s the middle of the month and you’re two or even three weeks from your next paycheck. You’re driving to work like usual when a dashboard light starts flashing. The engine starts making noise. You don’t know what it means exactly, but you know it won’t be cheap. It’s weeks until payday, and you don’t have the money you need right now.
Ideally, you’ll have an emergency fund, a credit line, or a HELOC you can use for those sudden, unexpected crises. Sometimes, though, those are not available options.
If you’ve seen ads on TV for quick cash services, you probably thought they were too good to be true. They are. Most often, these are “payday loans.” This is a short-term loan against your next paycheck. And they are generally a bad deal for you.
They often work like this: You write a personal check to the lender for the amount you want to borrow, plus the lending fee. The lender holds the check until your next payday. At that point, they either cash the check or extend the loan. If extended, the payday lender then charges a new financing fee on the loan extension, and then you’re responsible for the whole amount. Fees add up quickly, which can turn your one-time emergency into a crippling debt crisis.
The fees are usually the highest allowed by law. Here in Michigan, that’s $15 for the first $100 borrowed. In other states, a whopping $15 charged per $50 loaned is not uncommon.
If you miss a payment on one of these loans, you may be in for terrible consequences. For starters, your credit score will suffer. The terms of repayment could also allow the lender to garnish your wages, seize your car, harass you at home or work, or even take you to court. The contract you sign with a payday loan provider can have all kinds of terrible traps hidden in the fine print.
This is why payday loans are usually used only as a last resort. The institutions making these loans are counting on that desperation to make their profits. What else can be done if you really need cash right now?
Fortunately, as a credit union member you have another option. Michigan Schools and Government Credit Union is happy to provide a safe alternative for these payday loans with Member Fast Cash. The loan offers the same convenience and fast service as a traditional payday loan. Plus, it can be requested 24 hours a day and in your account in less than 60 seconds. The approval process is quicker and it’ll cost less to finance the loan. The payday loan fees referenced above ($15 for 100), translated into an Annual Percentage Rate (APR) is almost 400%. To give that percentage context, Member Fast Cash as an APR as low as 20.40%.*
Additionally, the loan is not based on your credit score, instead it’s based on your relationship with the credit union, so it can be a great way to help rebuild credit. Member Fast Cash is available online only, so log in to your MSGCU account anytime if you’d like to apply or learn more here.
MSGCU can also help with one-on-one financial counseling and finding creative ways to help you save money every month. So it’s always worth a call to see what options may be available. Contact us, make an appointment or stop by a convenient branch office near you.
*APR = Annual Percentage Rate. Borrower must be a member for at least three months. Example: A loan amount of $2,250 with a rate of 21.006% APR for 30 months would have an approximate monthly payment of $95.37. All loans subject to approval. Rates are subject to change at any time. Contact a Member Service Representative for more details.
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