Quick Loans for Troops in a Pinch

YOKOSUKA NAVAL BASE, Japan - A $300 loan with no interest and no questions asked.

No, it's not free money - you have to pay it back in 10 months - but the Navy Marine Corps Relief Society's new Quick Assist Loan program offers servicemembers a quick financial fix and an alternative to predatory lenders.

QAL cuts the usual paperwork and aims to get the $300 in the hands of active-duty Navy or Marine Corps personnel within 15 minutes from the time they walk in the door, NMCRS Yokosuka branch director Andrea Bowen said Monday.

Sure, it's a small amount, Bowen said, but even small amounts can add up - especially if they end up in the hands of predatory lenders that charge exorbitant interest rates.

"That $300 will cost them $1,000 after a year with a payday lender," Bowen said. "We want people to come to us before they get in trouble, rather than after."

And, with no questions asked, QAL can be used for payments - like credit card and cellular phone bills - that NMCRS standard assistance cannot cover, she said.

Failure to repay the $300 loan could result in wage garnishments.

The program starts Jan. 23 - NMCRS' 104th birthday - but "the word is out already," Bowen said. The Yokosuka office is upping its staffing in preparation for the influx of QAL clients, she said.

The program's popularity was proven in a pilot run last spring where loan traffic leapt over 75 percent in eight test locations.

The initial QAL pilot was a $500 loan with a 12-month repayment. This was scaled back to $300 and 10 months as a matter of "affordability" due to the program's popularity, according to the NMCRS Web site.

NMCRS is funded through contributions, loan repayment, thrift shop operations and interest from the group's investment portfolio. The group provides combat casualty assistance and education support through the dollars earned on investments, but its principal mission provides no-interest loans and financial counseling to servicemembers in a pinch.

For example, the Yokosuka branch loaned out $480,000 last year and raised about $390,000, Bowen said.

But business is expected to boom with the start of QAL overseas - even though predatory lending overseas is not the problem it is stateside, Bowen said.

Lenders target the military community due to their "guaranteed paychecks," and will contact the servicemember's chain of command as an added pressure, Bowen said. Servicemembers can lose their security clearance, or worse, their jobs due to debt.

The Military Lending Act, which went into effect Oct. 1, 2007, capped interest rates at 36 percent and prohibited payday loans, vehicle title loans and refund-anticipation loans. But lenders have already found loopholes, like using a third party to set up an allotment, Bowen said.

How QAL works:

 1. Enter an active-duty Navy or Marine Corps personnel in good standing (no alerts and no outstanding loans with NMCRS) with their     military identification card and latest LES statement.

 2. Fill out the QAL form. Speed up service by bringing in a completed form. It's online at www.nmcrs.org
 
 3. The information is entered into the system.
 
 4. The $300 check is cut.

- Besides the money, the servicemember goes away with a money-wise guide, a spending log and an NMCRS pamphlet.

- The no-interest loan is due back to NMCRS within 10 months.

Other QAL facts:

 - QAL will not be offered on ships - Sailors and Marines must go to one of NMCRS' 53 full-service locations.

 - A sailor or Marine cannot receive more than two QALs in a 12-month period, and the first QAL must be paid off before another is    given.
 
 - Three or more QALs will be subject to individual examination, because loans are not meant to be recurring or chronic.

 - Spouses, retirees and weekend-drilling reservists are not eligible for QAL.

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