BIRMINGHAM, Ala.–Alabama Central Credit Union has partnered with two other organizations for a new loan program that seeks to “rescue” people from payday lenders “permanently and puts them on the path to healthy credit and financial success.”
Called the Lighten Up loan program, Alabama Central is being joined by the Community Foundation of Greater Birmingham and Gateway Financial Freedom.
According to ACCU, Lighten Up participants receive free financial counseling, a comprehensive credit review, and budget plan from Gateway Financial Freedom. Then Alabama Central Credit Union grants a loan that pays off their existing payday loans. Participants repay the credit union’s loan over 12 months with affordable monthly payments, which helps rebuild a credit history and also gives the consumer membership in the credit union.
“This is not a quick fix that will leave someone vulnerable all over again,” says Philip Blankenship, president and CEO of Alabama Central Credit Union. “This program removes the burden of payday loans and gives the person a long-term relationship with a trustworthy financial institution, one that will continue to serve them in years to come.”
The program’s partners said they have also been working “tirelessly” for legislative reforms related to payday lenders.
According to the Alabama Appleseed Center for Law & Justice, payday lenders can legally charge as much as 456% APR, which keeps many Alabama residents trapped in a never-ending cycle of debt. In contrast, Lighten Up participants pay only 15% APR, and receive their share of membership in Alabama Central Credit Union at no cost. Additionally, they have access to all the credit union’s other products, including checking accounts and auto loans for first-time buyers.