With payday and online loans drying up for Evanston and other Illinois residents, some people face a dilemma.
Namely, what do you do when you need money, but the lenders you used to rely on no longer provide you with money?
This is one of the impacts of the state’s Predatory Loan Prevention Act, which limits interest on small loans to 36% APR (annual percentage rate).
Many payday and online lenders in the state, which often charged 200-400% APR, have opted to shut down, or at least not offer loans in Illinois.
But help is available for residents of Evanston who may have used these institutions before. Not necessarily a loan… but rather an education in financial literacy and well-being; training on how to better manage your money and not get stuck in the endless debt trap.
Sarah Gordon, an Evanston resident, is Market Manager and Business Development Officer at Financial Health Networka non-profit consulting firm that helped the town develop the education program and select a partner, First Northern Credit Union.
“A lot of it,” Gordon says, “is about how you change financial behavior.”
Even though Evanston is a generally affluent community, Gordon says, “There are quite a number of people here who are financially vulnerable.”
“There are pockets of real need” in the community, she says, especially because housing is so expensive.
Nationally, the network reports that 14% of people are “financially vulnerable”, 52% are “financially coping” and 34% are “financially healthy”.
“Coping financially” means getting by and paying bills, but these people, says Gordon, “are a few financial emergencies away” from serious trouble.
The City’s partnership with First Northern offers a series of free webinars on a variety of financial health issues, ranging from dealing with a crisis, financing retirement and rebuilding credit.
The First Northern website says Evanston residents who complete a series of courses may qualify for a certificate of completion, which could qualify them for a credit-reporting loan.
It is basically a credit-building loan for people who may have had to rely on short-term payday loans due to poor credit scores.
For more information on the City-First Northern partnership for Evanston residents, go to evanston.balancepro.org.
There are also other financial literacy and coaching programs around town, such as the one offered by the Y women.
Gordon says Evanston is doing the right thing by having a financial wellness partnership program for residents.
But she would also like the city to join a national group of communities called Cities for Financial Empowerment.
Thirty-one cities, including Chicago, are part of the group, whose website says an initiative, called Financial Navigators, is helping residents cope with the financial impact of the COVID-19 pandemic, “providing assistance remotely to navigate critical financial issues and make referrals to other social service agencies and resources.
Gordon says those who are well off financially should know that not everyone is so lucky.
“We’ll never get people to afford a home in Evanston,” she says, “if we don’t start working on financial health from day one.”