Capital Good Fund: Payday Loan Alternative Review 2020

Capital Good Fund is an online, nonprofit lender that makes installment loans to borrowers with low income and no credit history or bad credit. Its borrowers typically need cash for emergencies or to help bridge an income gap during a difficult time.

With rates that don’t exceed 24%, Capital Good Fund personal loans are much cheaper than payday loans, but are still a costly option for emergency expenses. The loans are currently available to consumers in five states: Delaware, Florida, Illinois, Massachusetts and Rhode Island. The lender plans to expand to Texas in 2020, according to founder and CEO Andy Posner.

If you’re borrowing for short-term or emergency expenses, NerdWallet recommends exploring alternatives first.

» MORE: Installment loans for bad credit

Common uses of Capital Good Fund loans include car repairs, security deposits, refinancing high-interest debt and catching up on rent or utility bills. The company can offer low rates to consumers because it partly operates on donations and grants, Posner says.

The lender is one of a few offering an alternative product for those affected by COVID-19. Learn more about its small loans and other loan relief options.

Capital Good Fund Loan Types

Capital Good Fund offers several loan products based on the use of loan proceeds.

Emergency loans

These loans can be used for financial emergencies, like paying overdue utility bills and small debts.

Amount: $300 to $500

APR: 10%

Repayment term: Monthly payments over one year

» MORE: Compare emergency loans for bad credit

Immigration loans

These loans can cover immigration-related expenses, like obtaining citizenship and securing or renewing a green card. Capital Good Fund has staff fluent in English and Spanish, Posner says.

They’re structured differently depending on the amount you borrow. The majority of immigration loans are over $2,000.

Loans $2,000 and under

Amount: $700 to $2,000

APR: 24%

Repayment terms: Monthly payments over two years

Loans over $2,000

Amount: $2,001 to $20,000

APR: 15.99%

Repayment term: Monthly payments over four years

Other personal loans

These loans can be used for things like car repairs and security deposits, but not to repay other debt.

Amount: $700 to $2,000

APR: 24%

Repayment terms: Monthly payments over two years

How to qualify for a Capital Good Fund loan

To qualify for a loan from Capital Good Fund, you need a bank account or prepaid card (such as NetSpend, PayPal or U.S. Money) with two months of statements and income that can be verified with pay stubs or deposits into a bank account, for example.

You also must live in one of the five states where Capital Good Fund operates to qualify for a loan.

You don’t need a credit score or history to get a loan. If you do have them, Posner says they’ll be considered when you apply for a loan.

Banking history is the most important factor considered for approval, according to Posner. The company looks at the average daily balance in your bank account and whether you’ve had any overdrafts.

Posner says this information shows not only if a borrower has enough income to pay the loan, but also whether they keep enough money in their account every month to do so.

Capital Good Fund loan features

Loan flexibility: Borrowers who run into payment trouble may qualify for deferred payments or interest-only payments, as long as they remain in contact with the lender, according to Posner.

Other programs: Capital Good Fund offers a credit-builder program, in which you pay $10 per month for 12 months and the lender will report your payments to all three credit bureaus. This program also gets you limited access to financial coaching.

It also offers a full financial coaching program at $15 per month for 12 months.

» MORE: Get your free credit score

Capital Good Fund loan example

Here’s what you can expect to pay for one of its loans:

• Emergency loan: A $400 personal loan at 10% APR repaid over 12 months carries monthly payments of $35 and would cost $22 in total interest and fees.

• Immigration loan: A $5,000 loan at 15.99% APR repaid over 36 months would cost $176 per month and carry $1,327 in total interest and fees.

• Other personal loans: A $1,000 loan with a 24% APR repaid over 24 months would have monthly payments of $53 and would cost $269 in total interest and fees.

» MORE: Calculate estimated costs of a personal loan

How Capital Good Fund compares

Capital Good Fund has lower rates and smaller borrowing amounts than other payday loan alternatives, though lenders like Oportun, OppLoans and Rise Credit are more widely available.

Here are some ways to compare Capital Good Fund to other small-loan lenders.

Oportun: Offers loans up to $8,000 with APRs as high as 67%. Oportun is available in 12 states and offers consumer-friendly features like the ability to choose your payment date, add a co-signer or get a reduction on subsequent loan rates.

OppLoans: Offers installment loans up to $4,000 with APRs as high as 199%. OppLoans lets you refinance after on-time payments.

Rise Credit: Offers loans up to $5,000 with APRs as high as 299%. The lender operates in 32 states. Rise uses credit information, as well as income and bank account data, to assign borrowers an APR. Rise also allows rate reductions after on-time payments.

On-time loan payments at all of these lenders can help you build your credit score. Capital Good Fund and OppLoans report payments to all three credit bureaus while Rise and Oportun report to two.

Capital Good Fund is not a good idea if:

• You need to consolidate debt: You can use Capital Good Fund’s emergency loan to pay off debt, but the maximum loan amount is $500. The lender’s other personal loans have higher borrowing amounts but can’t be used for debt consolidation or refinancing.

• You have cheaper options: If you can’t pay your bills, see if you can buy time from your creditors, get local assistance or find cash elsewhere. Take the quiz below to explore your options.

If you take a Capital Good Fund loan