IRP Proposal to Improve the Financial Security of African Americans Though Loans
The Institute on Race and Poverty (IRP) is committed to the mission of ensuring all citizens have equal opportunities. Based on the data gathered, people of color are to this day the most financially underprivileged social group. Our team is currently putting together a proposal for economic development and fair lending. The project is primarily directed toward African Americans in the rural south. Our main reason for the demographic choice was the lack of programs for that specific group. Most research and funding has been focused on metropolitan areas mainly. We think it is our duty to first address the most stringent issues to close the racial wealth gap.
Financial security is the top concern when referring to racial disparities affecting African Americans. In the past decade, thousands of people of color received monetary support to help them cope with economic difficulties. When they need money, people from these communities have three main options: take a personal loan from a bank, apply for a short-term payday loan or borrow from a credit union. The choice depends on factors such as the applicant’s credit score, how much money they need, and how urgent their request is.
IRP proposes to help people of color handle their loans by means of providing them with adequate financial education and access to emergency funds and stimuli.
Personal loans from banks range from $1,000 to $50,000. Borrowers have up to 10 years. The APR ranges from 3% to 30% or higher. The deal one gets from a bank heavily depends on their credit score. In simple terms, the higher your score (720-850), the lower your APR (up to 10%). The application process is complex and rather time-consuming. Customers pay off their debt in fixed monthly installments. Both secured and unsecured loan options are available for customers.
Payday loans are meant to help borrowers solve their short-term financial difficulties. Clients get them faster due to the nature of the loan and the simplified application process. Most American citizens or permanent residents are eligible for a short-term loan. Amounts range from $100 to $1,000. Borrowers must typically repay their loan in one lump sum on their next payday. Payday installment loans are another product for higher amounts (up to $5,000) and longer terms (several months).
Getting a loan from a credit union is only available for active members. The terms and conditions are more convenient compared to banks. The reason is that credit unions are not for-profit, member-owned organizations. They exist for their members. Besides personal loans, one can apply for payday alternative loan products (PALs).The current economy makes it hard for African Americans to have a decent standard of life without getting into debt. Telling them that it’s a bad idea to borrow money doesn’t solve any of their problems. The blacks from the rural south, in particular, need help to deal with their financial issues. They need non-formal education and guidance. Money management is a learned skill, and families facing daily challenges need our immediate help. Contact us to learn how you can contribute to our mission.