SOUTH BEND – Desperate for money to keep the lights on and give her daughter some presents this Christmas, Patricia Patterson turned to short-term loans.
She had been there before. Patterson, 42, from South Bend, took out a payday loan to make ends meet a few years ago while living in Nashville, Tennessee, she said. It didn’t end well for her.
“It hurt my credit when they sent it to collections,” said Patterson, still upset with the experience of late payments to a payday lender.
His second time with a short term loan was very different. Patterson took out the loan last December in South Bend from a lender she calls “the JIFFI boys.”
“The boys at JIFFI did no such thing,” she said, noting the low interest rates and the lack of “harassing phone calls” that marked her first experience.
JIFFI is the Jubilee Initiative for Financial Inclusion, a non-profit organization started in 2013 by Peter Woo, a finance student at Notre Dame, to tackle what he saw as predatory lending in South Bend.
The JIFFI boys Patterson talks about are Jack Markwalter, CEO of JIFFI and company. All JIFFI employees, some of whom are women, are students at the University of Notre Dame or Saint Mary’s College. Patterson had only worked with men from the organization, hence the “JIFFI boys”.
“I didn’t know we had that nickname,” Markwalter said. “It really is a testament to the personal relationship we have with our clients and that sets us apart from traditional payday lenders. “
JIFFI offers an alternative to services such as the one Patterson dealt with in Nashville. This is the most important element of its mission, “to create a financially inclusive environment in the community of South Bend,” said Markwalter.
What it looks like now is offering short term loans with low interest rates and flexible payments, as well as financial literacy education. Now in his third year, Markwalter said he wanted to see JIFFI grow to accept new clients and bring in more money to lend.
Much of the money JIFFI lends comes from donations and grants, but JIFFI, a nonprofit, continues to charge interest on the loans it makes. The company sets the interest rate well below those of payday lenders, Markwalter said, and sees this as an opportunity for borrowers to learn more about how interest works so that when customers need to contract a loan from a bank, they familiarize themselves with the terms. .
“We don’t think that makes a huge dent in what they end up paying us when they repay the loan. The average is around $ 9 in interest, ”Markwalter said.
Compare that with payday lenders, who in Indiana can charge an annual percentage rate of 391. But even with such bad terms for the borrower, Markwalter said, he understands why payday loans are so popular.
“The most attractive thing about a payday loan is this instant access to money,” Markwalter said. “Most people who take out a payday loan are either behind on some of their bills or they have something that has thrown them off balance.”
For JIFFI customers, this can often mean a car breaks down, preventing them from getting to work and making money, Markwalter said. For these clients, losing a job is not an option. So they turn to what is often their only source of quick cash available: payday loans.
“But it’s expensive, and it’s the high interest rates,” added Markwalter.
Resorting to short-term, high-interest loans to solve emergency cash needs creates a cycle that can be difficult to escape, said Vincent Vangaever, vice president of financial empowerment at JIFFI.
“(The loan) is very short term – usually a 10 day to two week period during which you have to pay off the entire principle plus interest,” Vangaever said. “If a person doesn’t have $ 500 today, why is they going to have $ 550 in two weeks? “
JIFFI loans have always come with an element of financial education, Vangaever said. But JIFFI has expanded to offer financial empowerment classes to children and adults, whether or not they want to take out a JIFFI loan. They see it as another way to accomplish their mission.
“At the beginning it’s very, very basic, explaining what a budget is, how you can save – these really important lessons that a lot of students don’t teach in schools,” Vangaever said.
Along with the addition of classes, JIFFI has also grown significantly over its three years, now employing 40 students. In 2013, JIFFI granted three loans to customers in South Bend. Now, Markwalter has said that JIFFI has made 32 loans, but is still keen to grow and increase that number by directly reaching those in need of their services.
Most of their customers hear about JIFFI through charities. Bridges Out of Poverty, for example, linked Patterson to the loan program.
Amber Werner of Bridges Out of Poverty said she was happy to connect those in need with JIFFI. “This is a great opportunity for the people of South Bend to break the cycle of life with payday loans and to learn and understand the importance of credit,” said Werner.
But those who wish to apply can contact JIFFI directly, said Markwalter. Then they can complete an application.
Like any other credit institution, JIFFI expects to be reimbursed. But in this, too, it differs from the terms of a payday loan, Patterson said.
“I kept communications open with them. If there came a time when I couldn’t pay them, I called them, and they were okay with it. There was only once. where it happened. “
But in the end, Patterson ended up repaying his loan from the “JIFFI boys”.
“My last payment was on February 13, my birthday,” she said. “I would never go to another payday lender.”
For more information on the JIFFI loan program:
• Telephone: 574-400-5258
• Online: www.jiffi.org