Veridian CU Launches Payday Loan Program
WATERLOO, Iowa – Veridian CU announced yesterday it will be offering members a new payday loan which will be attached to a savings account. The credit union’s Payday Loan Alternative, or PAL, will be capped at 21% APR and will require borrowers to set aside half of the loan in a savings account. When an individual requests a PAL the amount will automatically be doubled and half of the loan will be deposited in a savings account and held until the loan is paid in full. To qualify for a PAL an individual must show proof of income, such as a pay stub or account statement and paycheck must be directly deposited into the savings account. The $1.1 billion credit union, formerly John Deere Community CU, will reduce the APR to 19% if individuals agree to automatically transfer loan payments from their savings account. Introduction of the payday loan program, due to start March 1, comes as state legislators are considering capping rates on car title loans, one form of payday lending.