High Interest Loan Conversion Program

The Atlanta Council of St. Vincent de Paul Society (Atlanta Council) has developed a SVdP Georgia High Interest Loan Conversion Program (Loan Conversion Program).  The lender is Associated Credit (ACU) and credit counseling will be done by ClearPoint Credit Counseling Solutions (ClearPoint).  These are two major players in consumer credit in Georgia. 

The Loan Conversion Program is intended to help make a systemic change in our client’s lives by providing market interest rate loans.  The Loan Conversion Program contains two parts – Personal Installment Loans and Car Title Loans.  We don’t often get a chance to make such a significant difference in our client’s lives.  This program is one of those chances.   

The Atlanta Council has piloted the Loan Conversion Program since November 2015 with 5 conferences.  Two loans have been successfully closed and a third is under consideration. The Council is now ready to launch the program state wide and begin to receive referrals from all SVdP Georgia Conferences.

Background

Car-title loans and personal loans are expensive loans averaging more than $1,000 that are secured by the title to a vehicle that the borrower owns free-and-clear.  They are traditionally offered as payday-loan-like single-payment loans with one-month terms, which tend to be renewed multiple times like their payday counterparts.  An emerging practice is a movement toward longer-term and still high-cost installment products.  The very structure of car-title loans leads to problems for consumers, including excessive repayment fees and repossessions. READ MORE

Objectives

The High Interest Loan Conversion Program is designed to provide an opportunity for SVdP Georgia to help people we serve who have high interest ‘Payday’, ‘Title’, and other loans to convert those loans to a traditional credit union personal loan.  This program is administered by the Atlanta Council.  This program’s primary purpose is to provide our clients an alternative to predatory lenders.  Individual loans are guaranteed by the Society of St Vincent de Paul Georgia.  Clients locked into these high interest loans often find themselves in a perpetual cycle of just paying the interest and having to refinance the principal.  The inability to ‘get themselves out from under’ loans like this prevent people from becoming financially stable and self-sufficient.

Program Highlights

This program is designed to convert existing high interest loans that are preventing people from becoming stable and self-sufficient into new low interest loans that will permit them to get control of their financial situation and move from dependency and need.

All loan applicants must be referred by the sponsoring Conference and approved by the Atlanta Council prior to referral to ACU.  The specific Program Highlights are as follows:

  • The loans will be administered and issued by ACU while being guaranteed by funds held in reserve by the Atlanta Council. 
  • The clients will be developed and recommended by Conferences to the Atlanta Council.
  • Loans will be guaranteed by funds held in reserve by the Atlanta Council.  The referring Conference will provide 50% of the reserve funds.
  • The program is only for existing loans and not for new loans.
  • The process for client vetting and approval must be respected and followed in all cases. 
  • This program cannot support emergency situations. Emergency situations are to be handled at the local conference level in accordance with their normal conference processes and procedures.
  • This program is not for the payment of rent, utility bills, appliance purchases, or other typical household operating expenses.
  • Clients must be employed or have a dependable source of income.
  • All loans must be approved by the Atlanta Council prior to referral to ACU.
  • ACU may refuse to process a loan even with Atlanta Council’s guarantee if they have evidence of fraud or illegality.
  • The minimum loan amount is $500 and the maximum amount is $1,500. These amounts may be adjusted upon mutual agreement of Atlanta Council and ACU under special circumstances.
  • The maximum loan term is 24 months; but the credit union and Atlanta Council can mutually agree to extend that term under special circumstances.
  • Not all clients will qualify for this program.

Approval Criteria

The Atlanta Council and ACU are the client approval levels in the Loan Conversion Program.  The conference will recommend the client.  The basic criteria for approvals and recommendation are as follows:

Client Responsibilities

The client is an active participant in the process.  The client has certain responsibilities as follows:

The Loan Process - Atlanta Council, ACU and ClearPoint

  • Once a client is identified by a Conference as a candidate for a loan the Atlanta Council staff will be notified by the Conference.
  • The home visitor/conference president will review with the client the loan process and requirements to gain client understanding and agreement. 
  • The Conference home visitor /president will obtain all necessary information about the existing loan.
  • Once a client is approved by the Atlanta Council as a Loan Conversion Program candidate, the Atlanta Council staff member will contact ACU.  ACU will order a credit report and determine the debt ratio of the client. 
  • ACU will conduct the loan origination meeting, secure all necessary documentation, order and analyze the credit report, review decision criteria including the Debt Ratio and make the final credit recommendation.
  • The SVdP CEO has final approval on all loans.  Council Office will maintain a file on each loan with application and CEO approval signature for audit purposes.
  • ClearPoint will conduct all financial literacy training sessions.
  • Once a loan is approved by ACU an Atlanta Conference or Council representative will accompany the client to ACU.
  • Once the loan ‘closes’ ACU will be responsible for management of the loan.  Atlanta Council will be kept informed of the status of each loan through monthly reports. 
  • If a client falls 10 days behind on repayment, Atlanta Council and the conference will be informed by ACU.