Daily Dupaco

Wednesday, May 11, 2016

Dupaco remains a thrifty refuge from payday lenders

Dupaco helps members in a short-term pinch, and coaches them to the goal of financial independence. That's because we're a not-for-profit cooperative, where people are worth more than money.

Nearly one of every four loans made by Dupaco is a small-dollar loan of $2,500 or less. In 2015, Dupaco made 7,903 loans that were $2,500 or less.

Dupaco Loans $2,500 and Under:

Number of Loans Made: 7,903
Average Loan Balance: $1,186
Average Interest Rate: 12.17% APR
Loan Fees Charged: $0
Repayment Terms: Flexible

Of those 7,903 loans, these were $500 and under:

Number of Loans Made: 1,527
Average Loan Balance: $427
Average Interest Rate: 12.28% APR
Loan Fees Charged: $0
Repayment Terms: Flexible

Comparison of Dupaco's small-dollar loan to a loan from a typical payday lender

Dupaco:

Loan Amount: $100
Loan Fee: $0
Average Interest Rate: 12.44% APR
Repayment Term: 1 month
Actual cost of credit: $1.02

(Loan payment example for illustrative purposes: If you borrow $100 from Dupaco for a term of 1 month with a 12.44% APR, the payment and the total payoff amount will be $101.02.)

Payday Lender:

Loan Amount: $100
Loan Fee: $16.50
Average Interest Rate: 430.17% APR
Repayment Term: 2 weeks
Actual cost of credit: $16.50

(Payday loans range in size from $100 to $1,000, depending on state legal maximums. The average loan term is about two weeks. Loans typically cost 400% annual interest (APR) or more. The finance charge ranges from $15 to $30 to borrow $100. For two-week loans, these finance charges result in interest rates from 390 to 780% APR. Shorter term loans have even higher APRs. Source: http://www.paydayloaninfo.org/facts)

Payday lenders may argue that the APR is misleading because loans are often paid back within two weeks. But, if the borrower is unable to repay the loan in full, the cost of the loan escalates. At this point the loan is "rolled over" into a new loan. If this continues, the original payday loan becomes expensive and starts a cycle of debt. By setting up loans with easier repayment terms, Dupaco can help individuals stop the borrowing cycle.

Are you interested in opening a loan with Dupaco? Apply online in minutes, or contact the consumer loan department by emailing loans@dupaco.com or by calling 800-373-7600 / 563-557-7600, extension 202.

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