Payday Loan Alternatives: Chicago
Posted: July 16 2020
By: Daniela Bucay
Last month, we shared the best ways to avoid a payday loan in Houston. In keeping with our commitment to providing affordable financial products that help American families meet their current needs and secure their financial future, we now present the best payday loan alternatives in Chicago.
Fig is proud to work with a number of nonprofits in Chicago. In this post, we'll share some alternatives for those of you in the Chicago area looking for auto loans, bad credit loans, and other forms of financial assistance. Many of these options come from partner nonprofits, including national and local organizations.
Although Chicago boasts the second-largest public transit network in the country, many Chicagoans rely on cars to get around. Cars, however, contribute to a high percentage of the consumer debt in this country. According to the Wall Street Journal, car dealers "now make more money on the loans their customers take than on the cars they sell."
For those of us with bad credit, the options are even more limited. Here are some ideas:
- Community Plus Federal Credit Union is a credit union operating in Chicago that offers car loans with interest rates that max out at 8.49%. CPlus FCU is a member of the Illinois Asset Building Group, a trusted nonprofit partner in the Chicago area.
- Another IABG partner, the Great Lakes Credit Union also offers low interest rates on auto loans to its members. You will, of course, need to be a member of the credit union to apply.
- Capital Good Fund also operates in Chicago and offers a variety of loans, including auto loans. We like Capital Good Fund because their mission aligns closely with ours, however, their application process is longer and there may be more checks due to their being a nonprofit.
- Although not an auto loan, emergency transportation assistance is available through certain nonprofits. For example, the Salvation Army at Chicago Midwest advertises on its website emergency transportation assistance for families in need. Other nonprofits in your area may offer this type of assistance well, so it always helps to ask! You may need to complete a longer intake process to qualify for this type of transportation assistance, but it could very well be worth it.
Bad Credit Loans
As you may know, we really don't recommend payday loans and believe there is almost always a viable alternative. If you need a loan for an unspecified reason and have bad credit, here are some options:
- Capital Good Fund, which we mentioned above, also offers personal loans. The rates for these vary depending on the purpose of the loan, but none of their loans exceed 24% APR.
- Two of the credit unions mentioned above, Community Plus Federal Credit Union (CPlus FCU) and Great Lakes Credit Union (GLCU), offer personal loans to its members. Credit unions can be a great lender because they operate at the community level, and, because they handle other banking needs, have a more holistic picture of your financial situation. Please be aware, however, that you will need to be a credit union member in order to apply for a loan.
Credit Builder Loans
Sometimes, you may turn to an online loan for bad credit to improve your credit, even though you don't need immediate cash. For those of you looking to build credit, which will help you avoid payday lenders in the future, we recommend a credit builder loan. Take a look at the following credit builders:
- The Resurrection Project, a partner nonprofit with an amazing financial assistance team (we love you!), offers personal loans through its TRP Lending Circles program. These loans are designed to build credit over time to ensure future financial stability, while steering you away from payday lenders in the present. To apply, you will need to contact the Resurrection Project. All the information is on their website!
- Our partner, the Center for Changing Lives has a small, powerhouse financial opportunity team that can help you do anything from setting up a plan to repay your student loans to navigating SNAP applications. We love them and think you will, too.
- Another wonderful partner is the Northwest Side Housing Center, which can not only help you navigate housing questions, but also has a financial opportunity center to offer nonprofit financial counseling.
- The Heartland Alliance, which runs the Illinois Asset Building Group we mentioned earlier in this article, offers lots of financial education workshops. If you have ever been homeless, they also run a wonderful matched savings program where they will match however much you save, dollar for dollar, up to $200.
- One cool program we found is LIFT, which prides itself on investing in parents. You need to enroll in their program and have a child under 8 years old to receive any money, but they offer holistic coaching (career, financial, educational), emergency funds, and a broader community of peers working towards the same goals!
- LISC, a national nonprofit we trust wholeheartedly, operates a whole slew of Financial Opportunity Centers in Chicago. You can find a directory using the link above!
Checking and Savings Accounts
I'm not proud to say that I have wasted money on banking fees. There are, however, great low-cost bank accounts available through our partners.
Bank On Chicago works in partnership with the United Way of Metro Chicago to help you get a customer friendly checking or savings account! The United Way recommends speaking with a financial counselor first (it's free). After that, you can use the tool on the Bank On website to find a partner bank in your neighborhood and open an account.
Bank On accounts can offer perks such as free debit/ATM, online banking, mobile banking, wire transfers with financial institutions that are FDIC (Federal Deposit Insurance Corporation) insured. The best part is your account could qualify for $0 monthly service charges!
Other Nonprofit Ideas
Some of the ideas below don't fit neatly into the box of loans/accounts, but can still provide financial relief to families in Chicago. Some of these are our partners, whereas others we have researched and found intriguing. Most of the nonprofits below offer financial coaching or have financial opportunity centers. Although the precise tools they can provide beyond coaching may not be obvious, we still find that nonprofit credit counseling makes a great place to start your journey to prosperity.
We hope that the loan alternatives above give an idea of the amount and variety of nonprofit options available. If you need help and are thinking about taking out a loan, but you want to know if there are any nonprofit resources to address your current situation, the United Way of Metropolitan Chicago is a great place to start. If you'd rather talk to us, we're available at firstname.lastname@example.org, Facebook, Instagram, and Twitter.