The RescueLoan was established as a sensible alternative to predatory lending. It is a collaborative loan program where a local church establishes an account at the The United Methodist Credit Union to provide collateralized, small, short term loans with very low interest rates for their church members who would not qualify for loans otherwise.
To qualify for a RescueLoan, the borrower covenants with the church and agrees to receive financial counseling, loan monitoring, and payroll deduction. The program is a way to provide your church members short term help during a financial crisis and financial management tools to assist them with long term financial stability.
For details on partnering with TUMCU to establish a fund at your church call 866-657-0004 or email the Lending Department at firstname.lastname@example.org.
The RescueLoan (formerly known as the Jubilee Assistance Fund, was featured in the article linked above in The Washington Post and received the 2014 Dora Maxwell Social Responsibility/Community Involvement award.
What is Predatory Lending?
The marketplace is home to multiple forms of high-cost, high risk credit that compromises the financial security of low and moderate income consumers. Car title loans and payday lending are common examples of this predatory lending.
The interest rates associated with car title loans can be as high as 264% APR, causing a borrower with a $500 loan to incur finance charges of $953 for a 12 month loan. Should the borrower become unable to repay, the lender can repossess the vehicle, jeopardizing the borrower’s ability to obtain and maintain employment. In comparison, a RescueLoan of $500 for 1 year with a 6% APR would accrue only $16 in interest charges.
Escaping this cycle of debt becomes increasingly difficult for consumers who fall victim to predatory lenders. RescueLoans provide a better means for obtaining a short term loan.