Jane McIntyre is a loan officer with Capital Good Fund and is responsible for overseeing the new Woonsocket Payday Alternative Program that launched Nov. 4 in partnership with United Way of Rhode Island.
McIntyre previously worked as an AmeriCorps VISTA with NeighborWorks Blackstone River Valley in Woonsocket and is a member of the New Leaders Council of Rhode Island.
She has a bachelor’s degree in sociology and gender studies from Oberlin College.
PBN: The Capital Good Fund opened a micro-branch in Woonsocket on Nov. 4 to encourage financial empowerment, more specifically as an alternative to payday lenders. How did the decision to open that branch come about and why did you choose Woonsocket?
McINTYRE: With rent-to-own, cash for gold and payday lending shops dominating the financial landscape, Woonsocket is a city in need of consumer alternatives. Capital Good Fund and United Way of Rhode Island, which funded the program's launch through a generous $57,000 grant, decided upon Woonsocket as the site for this pilot initiative after payday loan reform stalled in the statehouse this year. Rhode Island is the only state in New England without a cap of 36 percent APR on payday lending. Through a special-carve out in the state's usury laws, licensed check cashers can offer payday loans at a rate of 260 percent APR on two-week terms. That’s important to note, because it’s a very small window for paying back a loan and leads many borrowers into a roll-over cycle of fees and interest. The profitability of the payday industry relies upon the inability of borrowers to make payments on time.
One of the main arguments advocates of payday lending make is that there are no alternatives for people in need of emergency funds, and that despite high percentages of interest and tremendous roll-over rates, payday lenders are saviors for those who have nowhere else to turn. Through the Payday Alternative Program, our aim is to not only negate the argument that there are no alternatives, but to provide more than just a temporary solution for those in need of emergency funds. Rhode Islanders deserve financial options that support them in planning for future financial stability, so they can avoid situations such as taking out a payday loan.
Unlike payday loans, our small dollar loans are at a significantly lower interest rate, are credit building and actively work to restore empowerment to those who have limited access to financial institutions by connecting clients to financial coaching resources in the community. We want a Rhode Island where people already have the emergency funds to support themselves in times of need. Our services are not meant to keep people coming back for loans – they are meant to be a platform by which individuals and families can begin to focus on saving money and building assets rather than paying off interest.
PBN: The Capital Good Fund found research that indicates payday loan recipients can end up paying more than $450 interest on a $325 loan. How does that happen? What will be the interest rate with a loan from the Capital Good Fund and what is the total amount a borrower will pay $325 loan?
McINTYRE: Payday lenders in Rhode Island can charge up to 260 percent APR, which they do on two- week terms. Up front one might say, “Well, two weeks does not accrue that much interest,” but consider the difficulty many encounter in paying an ‘emergency loan’ back in that short of a span. A typical payday loan of $325 is flipped eight times, leading to a large stack of interest payments and fees. To even make a dent in the principal at that point, borrowers need to pay off $468 in interest, making the total payback a borrower faces over two months, $793. To make matters more challenging, if a borrower manages to make their payments on time, they are not reported to the credit bureau, leaving many in the same sub-prime credit bracket that may have led them to payday loans in the first place. Conversely, a Capital Good Fund small dollar loan of $325 at 30 percent results in a total payback of $395.41. Including a 4 percent closing feel, a loan with us would save that borrower about $400 in interest over the life of the loan.
PBN: What’s the plan for of the Capital Good Fund micro-branch in Woonsocket? How long do you expect it to remain open? How many people will work there and what will they be able to offer? What benchmarks are you looking to meet quarterly or annually?
McINTYRE: As a pilot initiative, our main focus over the next year will be determining how best to serve the Woonsocket community efficiently through this new and unique product. Starting with one loan officer, we have a modest goal of closing 10 loans per month. Through our community partnerships, we aim to serve each client by offering them individualized free financial coaching. These coming months will seek to build and fine tune the foundation for what we hope to be a sustainable and expandable program.
PBN: Have you found that many Rhode Island residents who have come for financial counseling have used payday lenders? If so, what’s the usual reason they had to resort to that?
McINTYRE: Many of our clients have taken out loans with payday lenders in the past. The reasons vary, but it all comes back to not having accessible emergency funds. If you rely on your car to get to work and it breaks down, a payday loan sometimes seems like the only option to save yourself from lost wages. Free financial coaching offers clients the tools to approach the sometimes daunting task of budgeting and building savings.
PBN: Do you plan to have long-term financial coaching available in Woonsocket? Do you think that many banks suggest to customers they can come in and receive financial guidance and do you think people go to banks for that service? Do most of the people you encounter who have payday loans have a relationship with a bank or credit union?
McINTYRE: Woonsocket is a community full of people deeply dedicated to changing the course of its economic direction. Our community partners are strongly rooted and serve a large portion of the population through countless services. By connecting our program with their financial coaching resources, we hope to increase accessibility to financial institutions for members of the Woonsocket community. As a nonprofit, we have far more flexibility in whom we do business with than a bank or credit union. We hope to act as the bridge that connects unbanked and under-banked clients with those financial institutions.
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