Stretch Pay Loans.
Stretch Pay loans are a great alternative to payday loans and lenders. The interest rate charged is much lower, fees are reduced, and they are a competitive product. Many credit unions, and even some local community banks across the nation are starting to offer this loan product to members. Some locations may provide this type of financing to the general public as well, even if they are not a customer of the particular bank or credit union. A Stretch Pay loan is created by credit unions and they can offer more affordable rates by allowing these various lenders to pool their loan loss reserves. They offer borrowers a better APR rate and a longer pay back term than what typical payday loan companies allow consumers.
Stretch Pay Loans as an alternative to payday lending
Many consumers are using this product to pay for unexpected expenses and short term bills without being taken advantage of by predatory lenders or high interest rate payday lenders. The product is a special loan program that was created with the goal of helping those who need some short term cash. It is a solid, if not better alternative to many of the products that are on the market. The stretch pay loan will help members of credit unions and banks who need a small-dollar loan to carry them over until their next regularly scheduled pay check. It is short term financing, and they are a great alternative to consumers.
How do stretch pay loans work?
While each lender that offers this product will have some slight variations in the terms of the loan, their interest rates and how the program is run, in general a Stretch Pay loan was designed to make it easy for consumers or credit union members to obtain cash to pay bills and expenses. It will also allow them to get access to short term credit with one important difference. The borrower will need to repay the entire outstanding balance of the loan (plus a reasonable, very low amount of interest) before another advance is permitted.
Pros and advantages of a stretch pay loan
As indicated above, a big advantage to the member by using a stretch pay loan product is that the fees and interest rates charged are much less than a traditional pay-day lender. Another pro of these offerings is that these loans help build a positive credit history for the borrower, which will help put them back on the path to long term financial stability and allow them the ability to access additional credit in the future. They are a cheaper and more economical alternative to payday lending.
While each lender will offer their own terms and rates, in general here is how stretch pay loans work. The loan amounts offered to an applicant will typically range from $250 to $1,000. Many lenders will require the applicant to pay a small annual fee when entering into the arrangement. The fee can range from $20 to $50, and it will only be due with the first advance taken. Most common is that the loan must be repaid within a 30 day period. Usually no minimum credit score is required by the applicant.
Interest rate for a stretch pay loan
The interest rate charged for a stretch pay loan is much lower than from a payday lender. The rate may range from 12% to 20%. So while this is still fairly high, the savings are substantial with this lower rate. As an example, at 18.00% APR interest your 30 day expense for the interest would be only be $3.70. Compare that to many payday loans, in which the interest rate can be 100% to 200%.
There are many ways to apply for a stretch pay loan. Both national as well as local lenders may offer them. National banks as well as credit unions (for members only) or local or regional organizations can issue funds. In all cases, be sure to shop around for the stretch pay loan with the lowest interest rate as well as fees - even compare products.
A stretch pay loan product is now starting to be offered by credit unions and small banks across the country. Some national lenders, such as Bank of America and Citi, are also starting to offer this type of shorter term financing. You need to call your local credit union to ask them about this product, and refer to it by this name. It can be a great payday loan alternative.