Need emergency cash? Cuyahoga Falls group considering an alternative to payday lenders
By Paula Schleis, The Akron Beacon Journal | |
McClatchy-Tribune Information Services |
Davidian -- a local activist who organizes support groups for The Chapel and has been an outspoken advocate for struggling families -- has been working with a small ad hoc committee in the Falls trying to develop an alternative small-loan program.
But such things take time, so Davidian funneled his passion into a one-man protest in front of various
That's where he met
"We've never struggled like this before," Irby said after visiting
Irby and his wife both found part-time temporary work but it wasn't enough. So using the title of their 13-year-old truck as collateral, they took out a
A month later, the Irbys found the only way they could pay it off in time and have enough money to pay the next round of bills was to take out a second loan -- this time for
That means the Irbys will have shelled out almost
"They are modern day loan sharks," Irby said. "Me and my wife are trying to pay this bill off and we don't ever want to mess with them again. Ever."
Davidian would love to see
A group put together by
"These people still need a place to turn to," Pallotta said. "We can really help people in this community by giving them another place to go."
The group's goal is a self-sustaining program that requires nothing from the city except an endorsement on the city's website and in utility bill mailings.
"My hope is the city endorses the program and with the help of the
But first and foremost, the committee needs at least one local bank willing to become a partner in the two-year pilot. The latest draft proposal would have the bank charging prime rate plus 7 percent, 2 percent of which would pay for default insurance.
In exchange for the loan, the borrower must agree to take a finance class, set up a savings account and make scheduled deposits.
Education critical
Many payday borrowers "don't have an understanding in basic thrift, so they are ripe to be taken advantage of," Sturkey said. "It's not a lack of intellect, but a lack of training. In many cases it's not a lack of income, but a lack of discipline."
"You can give them a loan but you also have to help them answer the question, 'How did we get here?' " Sturkey said.
Pallotta and Davidian have met with one bank executive so far and are awaiting a response. Not all cities that have tried lending programs have been successful. Davidian said some have been too dependent on grants and paid staff -- something the Falls committee wants to avoid.
Davidian believes it's possible for a bank to make such loans with its own money and still get a profit.
"We want [the bank] to grow their customer base, not just fund bad loans. We want these to be good loans," he said.
And after learning
If
In the meantime, he has also been contacting state legislators to encourage them to pass stricter laws.
Some are listening
His plea will find some open ears.
A ruling by the
U.S. Sen.
"We've seen how
"Now, the
There's no way to know how many people in
"As far as I'm concerned," Davidian said, "that's a lot of people who need help."
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