A Financial Literacy Program for Payday Borrowers
•FREEDOM LOANS: A financial literacy program offering a pathway to monetary freedom for motivated payday borrowers. Freedom Loans offer qualified borrowers the opportunity to convert payday loans into low-cost term loans utilizing a Freedom Loans guarantee. In exchange for this valuable gift, borrowers agree to communicate weekly with a Freedom Guide for the purpose of mentoring them towards the rehabilitation of their credit and development of wise financial habits.
•PAYDAY LOAN: A payday loan is a financial product that provides income constrained consumers with a small-dollar loan usually payable in full at a borrower’s next payday. The payday loan process is simple and readily available to consumers needing help with urgent financial needs. The demand for small loans is significant as Federal Reserve statistics indicate that seventy-five percent of US households earning less than $50,000 cannot meet a $400 emergency expense without borrowing the funds. Unfortunately eighty percent of payday borrowers lack the capability to repay theirpayday loans at maturity and become trapped in an escalating debt cycle.
•PAYDAY LOAN HAZARDS: Payday loan services could be a cost-efficient “financial taxi” to help consumers faced with small short-term cash needs. However, just as a taxi is not economical for long-distance travel, a payday loan is inappropriate when rolled over as a long-term credit solution. Payday borrowers typically experience annual APR rates of 300% to 660% on their payday debt. This high cost debt produces a rapid growth in payments with little or no reduction of principal resulting in an increasingly hazardous situation for entrapped borrowers.
•FREEDOM LOAN OFFERS: A one of-a-kind rescue opportunity to convert existing payday loans into low interest fixed rate (currently 2.25% to 5.5%) multi-month loans. Borrowers, are qualified by their capability to repay a low interest multi-month conversion loan and referred to Lender Partners for loan origination and servicing.
•LENDING PARTNER: A federally insured Lender who originates and services a Freedom Loan on behalf of qualified Borrowers with a collateral guarantee from Freedom Loans. Lending Partners are motivated by their desire to reinvest in the communities they serve.
•SPONSORING PARTNER: A Charity, Church, Bank or employer collaborator who actively refers borrower prospects to Freedom Loans and helps recruit Freedom Guides.
•DONOR PARTNER: An organization donating funding to be utilized as collateral for Freedom Loans and or support of the Freedom Guides financial literacy program.
•QUALIFIED BORROWER: An individual seeking to escape a payday loan who demonstrates the capacity to repaytheir debt once it is restructured into a low cost multi-month loan. Borrowers must be motivated to commit to weekly communication with their Freedom Guide and be purposed to rehabilitate their credit by applying sound financial budgeting principles to their existing financial situation.
•FREEDOM GUIDE: A volunteer who agrees to mentor a Borrower through a multi-month financial literacy curriculum to improve their credit by learning and applying sound budgeting principles. Guides seek to develop effective relationships with borrowers and encourage them to develop new disciplines that will lead to the rehabilitation of their creditworthiness.
•FREEDOM BORROWER: A qualified prospect who is green-lighted to complete the conversion of their pay-day debt through a Lender Partner. Freedom Borrowers have demonstrated the capacity for loan repayment through completion of a Financial Questionnaire and detailed budgeting process. They also have committed to communicate weekly with a Freedom Guide throughout the duration of their Freedom Loan.
•FREEDOM GRADUATES: Borrowers, who repay their loan, complete the Freedom Loans guidance process and who have demonstrated progress towards building their personal bridge to financial freedom.
FREEDOM LOANS TERMINOLOGY
" A financial freedom ministry offering a pathway to monetary freedom for motivated income-constrained borrowers. Freedom Loans begins by offering to convert existing payday loans for borrowers trapped in escalating debt from recurring fees and high interest costs. Freedom Guides then assist each borrower in the weekly application of sound budgeting principles throughout their mentoring relationship."