QCash Loan or Payday Loans
July 26, 2018
Unexpected things come up in life. Car repairs, medical emergencies, and other expenses that must be taken care of seem to pop up at the worst time. Most Americans live paycheck to paycheck. While some people do have savings accounts, they may not have enough money saved to take care of a huge bill from the mechanic or emergency room. Many people will look for a short-term loan because they could have afforded to pay for the expense if it happened right after payday. They turn to payday lenders to get the money that they need. Many credit unions now offer two short-term loan products to their members to help them meet their needs: QCash and QCash Plus. Are QCash and payday loans the same thing? While they have some similarities, they are actually very different.
Both Designed to Meet Immediate Need for Cash
Payday loans and QCash products are both designed to help people with a very important problem: having the money they need to pay for what they need. Generally, payday lenders don’t care about how you plan to use the money. They care about whether you can pay it back on time. With QCash and QCash Plus, the application process is totally private. There is no question that asks credit union members why they need the money.
No Credit Checks
Another similarity between the two is that there’s no credit check. While there are some qualifications that must be met for either product, there’s no actual credit check. Generally, the qualifications involve the income coming into the household. This is often compared to current obligations. The purpose of reviewing a debt to income ratio, as it is called, is to analyze whether the recipient has the ability to repay the loan under the loan conditions.
While payday loans and QCash products have some similarities, they’re actually quite different. Here’s what you need to know.
Pay Day Lenders Are For-Profit Companies
A for-profit company is a company that is in business to make money. In and of itself, making a profit isn’t a bad thing. However, many payday lenders get into trouble over a concept known as “predatory lending.” This means that when they make these short-term loans to people, they’re doing so with terms that are harmful to the recipients. When people cannot pay their loans, many payday lenders may offer to renew the loan, but that also comes at a cost. Those extra fees can make it next to impossible for people to pay off what they owe. Most of those companies won’t accept a payment agreement that allows people to make payments each week or month to pay off what they owe. When people can’t pay, they could be called by employees or debt collectors who threaten to have them arrested. Such threats are against the law, but that doesn’t stop them from engaging in bad collection practices.
Credit Unions Are Not-For-Profit Companies
Credit unions are not-for-profit companies. This means that the money we make goes toward overhead. Overhead includes things like utilities, technology, paying our staff members, and creating better facilities for our members to use. Have you ever wondered why credit unions can offer such low-interest rates when compared to other financial or lending institutions? It’s because we’re not-for-profit.
Pay Day Loan Interest Rates Are Notoriously High
Would you accept a loan for a car if the only interest rate available was 400%? What about 800%? Although that seems like an outrageous question, it’s an important one. If you’re in the middle of a financial crisis, getting a payday loan could put you into a similar situation. Payday loans have notoriously high-interest rates that usually fall between 400 and 800%.
While desperate times may make you more open to getting the money you need at any cost, do the math. Even if you could have taken care of the unexpected expense on payday, could you afford it if it were 400% more expensive? For example, if you need $400, that might be doable on payday. Yet, 400% of $400 is $1,600.
If you need to renew a payday loan, you must pay a certain amount of money to do so. The interest on the original loan continues to build.
QCash Products Have Lower Interest Rates
When compared to payday loans, QCash products have much lower interest rates. With QCash, you pay $12 for every $100 you borrow. That breaks down to 12%. With QCash Plus, the interest rate is 36%. However, QCash Plus provides short-term loans between $701 and $4,000.
The Application Process with Pay Day Lenders
To take out a payday loan, you would visit a payday lender in your area. You’d need to take proof of residence, proof of income, and photo identification. While the process doesn’t take an extremely long time, it can still take an hour or two. Online payday lenders take time, too, although you can apply anytime. In a true emergency, you may not have the luxury of time.
Payday lenders generally give you cash or a check after you’re approved. If they give you a check, you’ll have to consider whether you can get it cashed. If’s it given to you in cash, you may have fewer issues.
The Application Process for QCash and QCash Plus
To apply for a QCash or QCash Plus short-term loan, credit union members can go through the application process at any time of the day or night through the QCash link on the credit union website. After completing the application process, most people receive a notification of approval within just a few seconds. Once approved, the money is automatically placed into your credit union account. There’s no waiting to cash a check.
If you’d like to read more about credit unions and small dollar loan programs, follow the links below. Or, if you’re curious about how you can help your credit unions when they need you most, download our Member Crisis Guide.
To learn more about QCash or QCash Plus, contact us.