Nonprofits and Waco Team Up to Find Cheaper Alternatives to Payday Loans | Local news

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The last decade has seen a proliferation of companies that make high-interest loans backed by a paycheck or a car title. Greater Waco now has 36 such lenders, raising $ 9.8 million in interest and fees last year, Texas Community Capital officials said. The signatures repossessed 690 cars in this county last year and they refinanced each loan on average 1.9 times.

In Texas, a $ 500 payday or title loan taken out for 14 days costs $ 115 in interest and fees. The typical annualized interest rate, or APR, is 664 percent on a $ 1,000 loan, according to the loan center.

In contrast, the Community Loan Center will offer up to $ 1,000 for up to one year at an APR of 21.8 percent. Borrowers can cancel their loan at any time without penalty.

With the Online Community Loan Center, no credit check is required, but the payment history will be reported to the credit bureaus, giving employees the opportunity to improve their credit history.

The Community Loan Center program has been established in seven Texas communities so far, including Austin, Dallas, Houston, Laredo, Bryan-College Station, and the Rio Grande Valley.

In recent years, the centers have issued more than 5,500 loans and saved employees more than $ 3 million, with a loan loss of just 3.5 percent. Texas Community Capital officials say bad loans are generally the result of people losing their jobs.

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