Four community-based organizations are launching a program to rescue residents of Maricopa County who struggle to pay off expensive title loans and help them get on the path to healthy credit and financial success.
The program is called “Lend a Hand” and is offered through a partnership between the Arizona Community Foundation, MariSol Federal Credit Union, Phoenix IDA and Take Charge America.
Arizona is the seventh most concentrated securities lending market in the country, according to the Consumer Federation of America. In its report, “Wrong Way: Wrecked by Debt”, the Federation also indicates that one in six title loan borrowers in Arizona has faced a repossession of their car and associated fees representing on average half of the debt. outstanding loan from the borrower.
âIndividuals in our community face what is called a debt trap. They are caught in a vicious cycle of borrowing at exorbitant interest rates, excessive fees and unrealistic loan terms, âsaid Juan Salgado, executive director of Phoenix IDA. âThe Lend a Hand loan program is an alternative for those who need help paying off their loan to avoid losing their car, ruining their credit or worse,â continued Salgado.
Here’s how the Lend A Help program works:
- Borrowers interested in a title loan can download an application and review the eligibility requirements at http://www.takechargeamerica.org/lendahand/.
- Once the application is submitted, the borrower can schedule a free and confidential credit counseling session with Take Charge America to develop a budget and create an action plan to eliminate debt and save for the future.
- MariSol Federal Credit Union will review the application for eligibility and reimburse up to $ 2,000 of the outstanding title loan for qualified applicants. MariSol will then convert the repaid amount into a new low interest loan with better repayment terms for the borrowers. MariSol will also help borrowers set up a savings account to fund future emergencies, requiring an initial savings deposit of $ 25 plus additional savings deposits of $ 10 for each month of the loan.
“The Lend a Hand loan program provides applicants with favorable loan terms at no cost, which will make sense for their budget,” said Robin Romano, Managing Director of MariSol Federal Credit Union. âApproved borrowers will also become members of our credit union and enjoy the benefits and stability it offers,â said Romano.
According to a study by the Pew Charitable Trusts in 2015, more than 2 million people, or about 1% of American adults each year, use high-interest auto title loans and borrow against their cars.
âStudies prove what we already see when we drive on certain streets in Phoenix. Car title lending companies are concentrated in financially vulnerable communities, âsaid Elisa de la Vara, community manager at the Arizona Community Foundation. âUntil Arizona policymakers act to further limit this industry, as they have done with payday lenders, this program offers a better option for residents who are struggling to pay off their auto loans. Â», Explained de la Vara.
Take Charge America, a national nonprofit credit counseling agency headquartered in Phoenix, is helping with the financial education component. âOur role is to focus on the long-term financial health of each candidate. As soon as you contact us, we’ll offer you a free credit counseling session, a thorough review of your credit report, and help you budget, âsaid David Richardson, CEO of Take Charge America. âWe aim to provide the knowledge and financial resources to help borrowers avoid any expensive lending pitfalls in the future,â Richardson added.
If you’re having trouble paying off a car title loan and live in Maricopa County, call 1-877-822-2410 or visit http://www.takechargeamerica.org/lendahand/. The Lend A Hand loan program will be available for a limited time while financing is available.