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Texas CUs to develop small loans for modestlow incomers
DALLAS (3/19/10)--The Texas Credit Union League is working with REAL Solutions-designated credit unions in the state and the National Credit Union Foundation (NCUF) to develop a small loan product geared toward low- and moderate-income borrowers. The program will be launched March 30. "Our goal is to get more money in the hands of the borrower," said Natasha Melugin, the league's REAL Solutions program director, noting that the short term loans will be affordable for low-to-moderate income Texans. The loan product, currently available only at participating REAL Solutions credit unions, includes:
* An interest rate capped at 18% instead of up to 400% annual interest rate charged by predatory lenders; * The ability to pay back the loan in installments up to 90 days instead of within one to two weeks required by payday lenders; * The ability to build a positive credit rating using the credit union; and * A forced savings component, requiring the borrower to deposit 10% of the loan into a savings account.
More than 50 Texas credit unions participate in the REAL Solutions, a signature program of NCUF.
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