After two years of struggling with homelessness and staying with relatives, when she landed a fulltime job in 2017, Judith Quintana was determined to make it on her own. She got an apartment in Federal Heights but soon found herself unable to pay the rent, so she turned to payday lenders.
Such lenders offer short-term loans, typically $500 or less, that are usually due on a person’s next payday or within a few months to a year. They are known for high interest rates and fees that often become debt traps for borrowers who may end up paying more in fees than the amount they first borrowed. Additionally, payday lenders generally don’t report to credit bureaus, so the loans don’t help to build credit. Payday loan customers frequently have multiple loans. Quintana’s loans left her overwhelmed and battle-fatigued.
“I was in a really desperate situation,” said the 65-year-old home health-care worker.
A fellow Catholic who learned of Quintana’s trouble when the two met at Eucharistic adoration referred her to the Society of St. Vincent de Paul, which in partnership with Fidelis Catholic Credit Union, offers a program called Fresh Start to help people in such predicaments break the cycle of debt.
“They gave me a loan to pay off all the payday loans. The rates were substantially less so I was able to make the payments and pay it off,” said Quintana, adding that she also received financial literacy coaching through the program. “It was something God put on this earth for me. It has been such a blessing.”
Through the Fresh Start program, which was launched in Denver two years ago, Fidelis will loan up to $2,000 at a low two percent interest rate due to cash collateral provided by the Society of St. Vincent de Paul’s Denver Metro Council.
“We established the program to assist our neighbors in need to get out of high interest, multiple fee, payday loans that just seem to never end,” explained Steve Loftis, the society’s executive director. “We try to help them break that cycle of debt by paying off those loans with a low-interest loan that can also help them with their credit scores.”
To be eligible for the program, the borrower must be a U.S. citizen or lawful permanent resident with income greater than their expenses, Loftis said. To date, the program has made eight loans.
“They’ve all been successful,” Loftis said. “One individual who paid off her loan was then able to get a car loan on her own because of her [improved] credit score. We were pleased to hear that.”
Participants are prescreened and referred to Fidelis through the St. Vincent de Paul Society, said Tedd Utzinger, Fidelis’ vice president of branch operations.
“The St. Vincent de Paul Society backs the loans with secured funds, that’s why we can provide a very good rate to these individuals,” Utzinger said. “Since we’re putting it into a complete loan it gets reported to the credit bureau. As long as they keep up with the payments it’s a positive line of credit reported to the bureau, which will help reestablish their credit. That’s their goal.”
Although Colorado now caps payday lenders interest rates at 36 percent, prior to last year the average payday loan in the state was 129 percent. Even with the new limit, such loans are designed to ensnare borrowers.
“When you see what they are paying per month and where it’s going to go, they’ll never get it paid off…there’s no hope for them,” Utzinger said. “We provide hope.”
“The credit union is here to help people,” added Justin Dickson, Fidelis’ president. “A small amount can help in a big way.”
For Quintana, the less than $2,000 Fresh Start loan was life-changing and a concrete sign of God’s loving care provided through the SVDP Society at Nativity Parish in Broomfield and the Fidelis branch at Immaculate Heart of Mary in Northglenn. She paid off her low-interest loan, has learned how to manage her finances and is rebuilding her credit.
“Fresh Start is truly a ministry of God. They are people serving God to teach and to bring hope,” Quintana said. “They weren’t ashamed of me, they were my cheerleaders.”
Quintana prays the ministry will continue for those experiencing desperation equal to and worse than what she did. Those days feel like a lifetime ago, she said.
“At night when I lay down my head I have peace — I know all is well.”
FRESH START LOAN PROGRAM For information or to donate, call Steve Loftis at 303-960-9163