Red River Mill Federal Credit Union (RRMEFCU) serves an economically distressed, rural investment area in the "Cotton Belt" region of Louisiana. Approximately 60 percent of the loans being made at RRMEFCU are to refinance higher-interest-rate (many predatory) loans. Recently, a man in his late 20s came into the credit union seeking a signature loan. He didn't know how much he wanted to borrow and had little experience and knowledge about credit. His only goal was to improve his credit score because he was told that he had bad credit and hoped that making another loan would improve his credit score. When the loan officer pulled his credit report to review it with him, she discovered that he had been at the same job in a nearby plant for five or six years. He had steady income and was making his car loan payments on time. Contrary to what he had been told, his credit score was just over 700. She also saw that he had purchased his car from one of the ubiquitous "buy-here, pay-here" auto dealers operating in the community and was paying 22.5 percent interest as well as exorbitant fees for insurance and other products that he did not know he had agreed to purchase. He was clearly a victim of an unscrupulous, predatory lender. Not only did he lower his interest rate to 2.95 percent by working with RRMEFCU, but by keeping the same monthly payment, he decreased the term of his loan by nearly three years!
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