OPTION 3: LOWER-COST LOANS

If the strategies described in the earlier sections of this guide are insufficient to address your needs, you might consider a lower-cost, short-term loan. Here are some affordable loan options—all of which charge 36% annual percentage rate (APR) or less.

woman handing money

Nonprofit, Mission-Oriented Lenders

  • Capital Good Fund is a government-certified Community Development Financial Institution. They offer an Impact Loan of $300 to $1,500 at 12% APR.
  • Jewish Free Loan Chicago offers zero-interest loans to people of all religions and backgrounds in the Chicagoland area (Cook, DuPage, Kane, Lake, McHenry, and Will counties). The average loan amount is $5,000.

Tip! Watch Out for Scams!

  • If you receive a call or text from someone you don’t know about COVID relief, Social Security, student loans, loan forgiveness, car warranties, or other benefits, there is a high probability the caller is a scammer. Look up the number for the company or agency on your own and contact them directly if you are concerned about whether the call is legitimate.
  • Emails that want you to click on a link, open an attachment, or provide personal information are highly risky.
  • Beware of any company offering “credit repair,” “debt management,” or “debt settlement.” These types of services are frequently rip-offs.
  • Scammers also use payment apps such as Venmo, CashApp, and Zelle to target victims. Scammers will often pretend to be a loved one in trouble or even pose as your bank telling you there’s a problem with your account. If you have any doubt at all, always take appropriate steps to verify the recipient’s identity before sending any money.

For more information about scams, visit the Consumer Financial Protection Bureau’s website.

Your Bank

An increasing number of banks are providing short-term, low-cost loans. Visit your bank’s website or call to find out the types of consumer loans they offer. If you don’t have a bank account, we strongly recommend you get one. People without bank accounts (the “Unbanked”), on average, pay considerably more for day-to-day financial transactions (check-cashing, remittances, etc.) than people with bank accounts. To learn about affordable banks accounts with no overdraft fees, visit Bank On Chicago if you live in Chicago. If you live outside Chicago, visit Bank On Illinois. A financial coach can also assist you with opening a bank account.

CIBC Bank has an affordable (14.75% APR) personal loan called the EasyPath Personal Loan. You can apply for the loan by visiting one of CIBC’s branches. You do not need to have a bank account with CIBC, and they won’t require you to open one.

Huntington Bank offers a line of credit to eligible account-holders called Standby Cash. The line of credit is interest- and fee-free if the customer enrolls in auto-pay.

US Bank offers personal loans to both customers (min. credit score of 660) and non-customers (min. credit score of 720). The interest rate ranges from 8.74% to 24.99% APR.

Bank of America offers Balance Assist, a small-dollar loan for its customers. The loan is up to $500 and charges only a flat $5 fee regardless of loan amount. The loan is repaid in three months by automatic deductions from your checking account. Note: Balance Assist is not available to customers with the “SafeBalance” account, which features no overdraft.

Citi offers personal loans up to $30,000 to new and existing customers at 10.49% to 19.49% APR.

Chase does not currently offer personal loans. However, their My Chase Loan product allows Chase customers to borrow money from their existing card’s available credit without any applications or credit checks.

Discover is also a popular source for personal loans. Note that one of their requirements is a minimum household annual income of $25,000.

Banks Taking Steps in the Right Direction

In recent years, many large banks have been taking steps to reduce or eliminate overdraft and non-sufficient fund fees. These policies vary by bank and the type of account you have, so be sure to familiarize yourself with the policies specific to your situation.

For example, Capital One no longer charges overdraft or non-sufficient fund fees on any of its accounts. PNC’s Virtual Wallet account has a feature called Low-Cash Mode that gives customers more time to fund their account to avoid an overdraft situation and, for each transaction that would overdraw the account, allows customers to elect whether the bank should clear the payment or reject it.

Credit Unions

Credit unions are similar to banks, but they are non-profit and have membership requirements.

  • Great Lakes Credit Union serves Lake, Cook, McHenry, Kane, DuPage, Kendall, Will & Kenosha counties. Members of at least 1 year can apply for a Cash-in- a-Flash loan, a personal loan up to $500 with no credit check at rates as low as 33.5% APR (this rate includes the application fee). Call 800-982-7850.
  • Self-Help Credit Union offers a variety of different banking and loan products for people with good credit or those who want to build their credit. Call 877-369-2828.
  • KCT Credit Union serves DeKalb, DuPage, Grundy, Kane, Kendall, McHenry, and Cook (west of Route 83) counties. They offer unsecured and secured personal loans to help borrowers consolidate debt, build credit, and more. Call 847-741-3344.
  • Community Plus Federal Credit Union serves Champaign, Ford, and Piatt counties. Borrowers who have been members for six or more months may qualify for their emergency loan with no credit check at 18% They also offer free financial counseling. Call 217-893-8201.
  • Members “First” Community Credit Union serves Adams, Brown, Pike, and Schuyler counties. They offer personal loans with APRs as low as 9.99%. Call 217- 223-4377.
  • SIU Credit Union serves 24 counties across Southern Illinois. They offer a personal loan with competitive interest rates, and borrowers who have been members for at least six months can apply for the Fast Cash loan at 18% APR with no credit check. Call 618-457-3595.
  • St. Louis Community Credit Union serves St. Clair, Madison, Monroe, and Jersey counties in the Metro East region. Their Works for Me personal loan is open to applications from members and non-members with APRs as low as 10.99%. (Note: for non-members an application will involve a hard credit inquiry.) Call 314-534-7610.
  • Unified Homeowners of Illinois Federal Credit Union serves all homeowners in Illinois. They offer personal loans up to $600 at 18% APR on a 12-month term, available to new and existing members. Call 773-283-9340.

Online Loan

Not all online lenders are affordable, and some are flagrantly violating the law by charging 700% APR! However, members of the American Fintech Council (AFC) adhere to responsible lending standards that include charging at or below 36% APR. All of the following are AFC members.

Personal Loans

  • Prosper offers loans up to $50,000 for emergencies, major events, debt consolidation, or purchases. Go online or call 866-615-6319.
  • Best Egg offers personal loans for major events, purchases, or debt consolidation. Go online or call 855-282-6353.

Banking and Loans

  • SoFi offers accounts, personal loans, credit cards, student loans, home loans, business loans, and investment options. Go online or call 855-456-SOFI (7634).
  • Lending Club offers personal, business, auto, and education loans. Go online or call 888-596-3157.

Business Loans and Lines of Credit

  • Allies for Community Business offers business loans, credit lines, and coaching. They do not consider credit scores or the value of personal collateral when evaluating eligibility for business loans. Go online or call 312-275-3000.
  • Funding Circle offers loans or lines of credit. Go online or call 855-385-5356.
  • Lending Club for business loans. Go online or call 855-846-0153.

You can compare different loan products at Nerd Wallet, but we cannot guarantee that a loan that appears on Nerd Wallet is consumer friendly.

Paycheck Advance/Early Wage Access

Many employers now offer services that provide employees with early access to their wages. Before signing up for one of these services, make sure you are aware of all fees involved.  There are also several apps that offer Early Wage Access (EWA) products. Earnin and MoneyLion are among the most well known. Some of the EWA apps are tricky to navigate – they might try to make you pay a “tip” when you borrow and make it difficult to opt out of the tip. If you want fund immediately, you will likely be charged a fee.

If you are cash-strapped and use these products, we recommend that you tip zero and, if at all possible, skip the optional fee for an immediate payment. Based on our experience, the money should hit your account in less than three business days.

If none of these options are appealing, you should consider asking your employer for an advance on your next paycheck.

Bottom line: If you pay no tip and no “immediate deposit” fee, you can obtain free payday advances from these apps. But, because the advances are repaid at the beginning of your next pay period, they may cause you to get stuck in a cycle of re-borrowing.

Tip! Beware Buy Now, Pay Later

Online shopping has evolved to make it much easier to purchase items that are unaffordable. Buy Now, Pay Later (Affirm, Klarna, Sezzle, and more) and PayPal Credit have become payment options on many sites. Our recommendation is to entirely avoid purchasing extravagant items that you cannot afford using any of these options. If you use them at all, we recommend using these options only for essential purchases.

Credit Card Advance

Making purchases with a credit card can be expensive depending on the fees and interest. Cash advances are typically even more expensive, especially if you do not repay them quickly. Check the credit card’s website or contact the credit card company to find out about available options.

Lending Circles

In a lending circle, a small group of people chip in every month and lend money to one another at no interest. Lending circles are formed between 6-12 people and loan amounts range from $300-$2,400. Each month, a new member of the lending circle receives the loan until everyone in the group gets their chance. Loan payments are reported to the credit bureaus to help participants build credit.

This option is not suitable for immediate needs or emergencies. A lending circle requires group planning, and you may not be able to predict when it will be your turn to get the loan. However, it may be helpful for large, planned purchases. You can learn more and apply.

Prefer Talking to a Live Person? Ask a Financial Coach.

Capital Good Fund’s Financial Coaching Department provides one-on-one financial advice to any Illinois resident. Starting at $15 per month, the nonprofit can create a plan with you and can advocate on your behalf with creditors. They also offer a credit-builder program for $5 per month. Call 866-584-3651 (English or Spanish).

Working Credit is a nonprofit that offers free financial counseling to help you build your credit, understand the credit system, and create a plan to reach your financial goals. Their credit building counseling program includes unlimited one-on-one support and coaching for 12 months for free. Sign up online (English and Spanish).

Man getting advice

The City of Aurora’s Financial Empowerment Center provides free, high-quality, one-on-one financial counseling to low-and moderate-income residents of the Aurora region. Learn more.

Many credit unions also offer free or low cost financial coaching. Check with your local credit union to learn about their offerings, and check the list under Option 3: Lower Cost Loans if you need help finding a credit union.

Acknowledgments

This resource guide is produced in partnership with New America Chicago, Woodstock Institute, and Financial Inclusion for All Illinois.

Special thanks to all the hardworking nonprofits, socially-conscious lenders, and community partners who are helping restore wealth in our communities. Your work is so important! Thanks also to Jane Doyle, Brent Adams, Rob Mayo, Amy Eisenstein, Vanessa Rangel, Gordon Mayer, Meegan Dugan Adell, Winston Berkman-Breen at Student Borrower Protection Center, and Bob Palmer at Housing Action Illinois for their work on this project.

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