Last year, Cynthia Sutton, a 54-year-old Dallas resident, suddenly found herself in a financial crisis. She needed money to repair the car she uses for her part-time job as a caregiver to her elderly clients. Without a functioning vehicle, she couldn’t continue to make money. But she also needed to buy groceries.

“My resources were low,” she recalls. “I didn’t have family or friends that I could borrow money from.”

Cynthia was wary of going to a payday lender. In the past, she borrowed funds from a lender that charged her more than 300% interest—turning a $300 loan into an $800 obligation. To make matters worse, she says the lender harassed her and was unwilling to work with her to help her pay off her loan.

Predatory Loans Are All Too Common

Unfortunately, Cynthia’s experience with a payday lender isn’t rare. Texas has the highest payday loan rates in the country, with typical annual percentage rates (APRs) running as high as 664%—more than 40 times the average credit card interest rate.

High interest rates make payday loans a significant problem for low-income North Texans, who often don’t have other options for a quick loan. Many borrowers are unable to pay down the loans and their high interest fees, and they’re forced to roll over or renew the loan, essentially getting trapped in a cycle of debt.

An Alternative to Payday Loans

At United Way of Metropolitan Dallas, we recognize the harmful nature of predatory payday and auto loans and their impact on the financial stability of our neighbors here in North Texas. Working with our dedicated supporters, we strive to limit the effects of high-interest loans on our community. We’ve advocated for reasonable loan practices at the city, state and federal level for more than a decade, which has resulted in measurable progress toward protecting the rights of borrowers.

We also provide people with alternatives to payday and auto loans. One of these programs is our partnership with Capital Good Fund, a nonprofit that works to tackle poverty in North Texas by offering small loans that are fair and flexible.

One of the loan types—a crisis relief loan—has been especially helpful for North Texans who are dealing with financial emergencies related to COVID-19 and who need funds for grocery purchases, medical expenses and rent. The loans are available in amounts from $300 to $1,500 at an APR of 5%, with no closing fee or down payment. Borrowers enjoy three months of no payments before making 12 monthly payments.

“Through our partnership with Capital Good Fund, United Way and our supporters are able to offer assistance to North Texans at the moments they need it most, while avoiding the outrageous interest fees charged by most payday and auto lenders,” said Greg Mangum, vice president of economic mobility at United Way of Metropolitan Dallas. “This year, the program will enable us to roughly double our impact of providing opportunity and access to safe, affordable and credit-building loans for low-income residents in our community.”

Making a Real Impact

Since Cynthia couldn’t borrow money from friends or family—and she hoped to avoid another payday lender at all costs—she was relieved to have another option to quickly access funds. She took out a low-interest $500 crisis relief loan from Capital Good Fund, and the money enabled her to get her car fixed so she could continue working.

She describes her experience with Capital Good Fund as spectacular. “They were so nice and professional,” she says. “They are really caring. They make you feel like family.”

Support Financial Stability in North Texas

At United Way of Metropolitan Dallas, we believe every North Texan should have the opportunity and access required to achieve financial stability. We invite you to be part of the change by joining our movement to ensure North Texans can get and keep better jobs, establish savings and hold on to more of what they earn.

Ready to start making a difference right here at home? Join the Live United movement to impact financial stability in our community:

• Donate to United Way of Metropolitan Dallas to invest in our income-related programs.
• Sign up for Advocacy Alerts, and we’ll let you know when and how to contact your elected representatives to advocate for policies related to financial stability.
• Volunteer with us at one of our monthly events.