The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

It’s all relative.

On October 16th, 2017, posted in: Just Because, Uncategorized by

binoculars with different filtersIt’s all relative.  I’m tall to anyone under six feet, but to a guy north of seven—not so much.  To somebody who doesn’t work out, I’m a gym rat.  To a triathlete, I’m a cupcake.  I’m a pretty good dancer at the family wedding reception, but to the folks who do it for a living, I look like I’m shuffling at a bus stop in shirt sleeves in the dead of winter.

No, I wouldn’t pay 36% for a credit card or for a short-term installment loan.  I’ve worked a lifetime to have good credit, and as they say “to the victor goes the spoils.”  Good credit means low interest rates, and the best possible loan terms.  But 36% for someone who has bad credit or some other negative facet to their history of borrowing, a chance at a loan for 36% is pretty good.  Especially given that the market rate in Missouri can drift as high as 440%.  It’s all relative.

Would I recommend such a 36% loan to a family member?  Darn tootin’ I would.  If that was their only option and circumstances dictated the necessity, I would wholeheartedly w recommend our Red Dough Payday Loan Alternative product.  Same goes for using money orders in lieu of a free checking account—if you’re not in position to have a checking account, forty-nine cent money orders are a heck of a deal.  It’s all relative.

Lending money and opening accounts is always dictated by risk mitigation.  A history of poor performance in one’s past banking life (loans or otherwise) usually points in the direction of ending up with high rates to offset the historical risk.  The truth be knowna 36%  annual percentage rate on a short-term loan is probably not enough.  Losses are high and servicing is expensive which leads to a higher rate of interest.  Remember, it’s all relative.

Congratulations to those of us who have maintained great credit throughout our borrowing history.  The truth of the matter is that the credit report is much more than black ink on white paper.  A credit report represents the standard of living that one enjoys.  A pristine repayment history garners the lowest possible loan rates allowing you to keep more of your hard-earned money in your pocket.  Antithetically, bad histories point to higher rates, but it’s all relative.

Payday lending exists at 440% because there is a market.  If there were no market, I promise you there would not be a single storefront.  So here comes Red Dough into the market with an alternative product that allows for longer than a two-week repayment at a 36% APR, and we have critics.  Really?

Remember, it’s all relative.  If we didn’t offer the alternative, people would still borrow.  Demand is high as evidenced by there being more Payday Lenders in Missouri than McDonalds.  By offering our 36% APR solution, we are creating opportunity for wealth accumulation that wouldn’t exist otherwise.  Who doesn’t see the good in that?

No, good borrowers would never use the product, but many borrowers who have made past  mistakes do.  To the critics, get down off your noble perch and recognize the good that Red Dough provides.  Demand will not go away, thank God there’s an alternative that helps.  Remember, it’s all relative.


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