Traditionally, like elsewhere in the country, most consumers in East Baltimore who required a small loan used to go to a community bank or credit union. Credit card programs soon took over. Credit card borrowing, as we all know, is very costly. As a result, many consumers ended up with a huge debt burden. In fact, the countrywide debt burden is estimated to be worth several billions of dollars now. And if you take into account all that stress and trauma of financial pressures because of debt problems, then it becomes an even more serious issue.
The Success of “Borrow and Save” in East Baltimore
“Borrow and Save” was started in East Baltimore a few years back to solve this riddle. Federal Deposit Insurance Corp. together with eight lenders in the area, and the Neighborhood Housing Services of Baltimore Inc., which is a nonprofit organization, launched this program. “Borrow and Save” was launched to allow residents in East Baltimore borrow funds at a lower cost.
The name “Borrow and Save” because the idea was people could take loan at competitive rates and save money that they would otherwise pay to the high rate lenders.
This pilot lending program was virtually an fast success. It gave people access to ready capital that they could borrow from, and like the name suggests, many of the borrowers were able to save money with the low fees and interest rates as well. Many people who took the loan were able to pay their car repair bills, for medical emergencies, and cover utility programs with this. Some even took the money to renovate their homes, add value to it, and for other reasons.
The Borrow and Save program started with a total of $90,000 available for lending. Each individual could take a loan of up to $1,000 only. The loan amount could be as low as $300. It was a pilot program to allow the lenders to gather information and learn about lending habits and consumer behaviors and preferences.
Soon enough, as it gained in popularity, more neighborhoods were added. The total funds available for lending grew too. All low to moderate income households throughout the city were allowed to borrow money from this.
Such Program Spreads Across the Country
Such was the popularity of “Borrow and Save” in Baltimore that soon enough, similar programs started to come up throughout the United States. Many such programs were introduced in rural areas as well in the US.
These small dollar loan programs turned out to be quite unique. Borrowers were given incentives to take money at friendlier terms and save as much as they could. The lenders wanted to promote the habit of saving money. They also wanted to make it easier for people to borrow funds when they required it in a real emergency.
Saving was a very important element. The lenders found out that a lot of people had very good budgeting sense, but many were living from one paycheck to the next. There was a high rate of defaults too. In fact, 20% loans were behind by 90 days or more. Neighborhood Housing Services came out with changes for lowering defaults. Financial literacy courses were also offered to the borrowers. They had to do a course before taking the loan.
As time passed and small dollar loans gained in popularity, it started to be called as payday loan as the consumers who took the loan returned them when they got their pay. At first people used to say “loan until payday” and then the shorter version “payday loans” became immensely popular and is still used very widely in US.
Payday Loans Are Much Like “Borrow And Save”
You will today find many payday lenders across the United States. These businesses work in much the same way as the “Borrow and Save” program of Baltimore.
Payday lenders usually offer loans between $100 and $1000 for a few weeks or till the next payday. But sometimes there can be an extension as well if you are unable to pay back the loan amount and the interest within the loan term. The interest burden is much cheaper than those charged by the credit card companies, and so the debt burden is easier to manage. Like Baltimore’s “Borrow and Save”, payday lenders are also helping people save money.
Payday lenders have made it easier for people to get these loans because they are processed quicker than what happens with conventional lending agencies and banks. In fact, you could submit your application online now and get it deposited to your bank account directly in just 24 to 48 hours. It rarely takes more time than that. There are almost no hassles too as very little paperwork is involved, and no standing in long queues. Your privacy is also guaranteed as you will usually apply for these loans from the Internet. You will never have to meet the loan officer if you don’t want to. Nobody has to know about your sudden financial situation.
Another great thing about these payday loans is that, there is no credit check. Which means that people with an average or even a poor credit score can apply for these loans or cash advances. Their applications would be approved. Actually the fact is that, these are the people who usually need financial help the most. But conventional lenders won’t give them the money they require.
Why Payday Loans Are Better Than “Borrow And Save”
Payday loans are in fact better than Baltimore’s “Borrow and Save” and such other programs you find today. Here’s how:
“Borrow and Save” and other programs like this always look at the credit report of an individual before deciding what to do with the application. This means that the money cannot be advanced so quickly (within 48 hours). These programs never make an advance to people who have past due accounts.
On the contrary, payday loan companies believe that there is no risk involved in lending money to those even with a past due. That’s because, these cash advances are just for a short period, typically for 2-3 weeks, and the loan amount is small as well. So the risk for the lender is very limited.
Payday loans have become so popular especially among the lower and average middle income households that almost every family takes at least 1 or more payday loan in their life. A few years back when the lending laws were not so strict people feared taking a payday loan. Its not the same anymore. There are many cases where lenders with bad practices were asked by the government to close their lending business. Popular payday companies like payday max etc have already closed their shops. Some lenders are also facing legal charges.
That is the reason we do not allow any non-licensed lender to join our network. If we get any complaint against any of the lenders in our network we stop doing business with them with immediate effect. We love what we do and we do it honestly.
Here’s requirements to get a loan from us:
1. You should be a citizen of the United States.
2. Should be 18 years of age minimum.
3. Should have a working bank account where the money can be deposited.
4. You must have a stable source of income.
If you have the above four you qualify to get a loan with us.
Thank you for visiting our website. Hope we helped you get a loan.