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'Really tough to dig out of': How a Regina mom broke a payday loan cycle
REGINA -- A Regina mother is sharing her story of how she broke a vicious cycle of payday lending.
Alysia Johnson found herself in tough financial times after a divorce and her expenses kept piling up.
“There were just enough things back to back that I wound up going to a payday lender for a term loan and discovering that my interest rate was 59.9 per cent,” Johnson said. “As you can imagine, that was really tough to dig out of.”
She says realizing the interest rate was just below the limit of 60 per cent was a wake-up call.
“That was a shock to me,” Johnson recalled. “It was shocking that I’d make a $100 payment and see $20 for instance come off my balance.”
Heading into Canada’s financial literacy month in November, Affinity Credit Union is using Johnson’s story to highlight its “Restart Loan,” meant to help people get out of or stay out of the payday loan cycle.
“I’m making progress, I’m making headway, it’s freed up a lot of my cash flow and I’m not feeling like I’m spinning my wheels,” Johnson said.
Affinity says this loan helps people by offering loans anywhere between $200 and $2000 to people with little or no credit history and can be approved within 24 hours, with much lower interest rates than payday lenders.
Over 1600 people who have taken part in the program since its inception in June 2018, but the credit union is calling on other financial institutions to create similar programs.
“We encourage all credit unions and banks to have a loan like this, because we know the need is great,” said Myrna Hewitt with Affinity Credit Union. “If the community is in financial need, we want to do what we can to help.”
“It’s like digging a hole, you get in a financial difficulty and the fees are quite high, and if you can’t pay it back within two weeks it costs more,” Hewitt added. “So the hole just gets deeper and deeper and deeper.”
Johnson encourages other people who feel like they’re stuck in a bad financial ‘hole’ to keep an open mind.
“Life happens. I don’t think people should be ashamed,” Johnson told CTV News. “At the end of the day, whether it’s a lot of little things that are dragging down your budget or some of the bigger things which are unavoidable don’t give up, look at your options.”