Capital Good Fund: Payday Loan Alternative Review 2019

Capital Good Fund is an online, nonprofit lender that makes installment loans to borrowers with low income and no credit history or bad credit who need cash for emergencies and other personal expenses.

With rates that don’t exceed 24%, Capital Good Fund personal loans are much cheaper than payday loans but still costly for emergency expenses. In addition, the loans are currently available only to consumers in four states. If you’re borrowing for short-term or emergency expenses, NerdWallet recommends exploring alternatives first.

Common uses of its 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, says Andy Posner, founder and CEO.

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

• Emergency loan: You can borrow between $300 and $500 for financial emergencies, such as paying overdue utility bills and debt repayment. The loans carry an annual percentage rate of 10% and require monthly repayments over one year.

• Immigration loan: Borrow between $700 and $20,000 at 15% to 24% APR to pay for immigration-related expenses, including obtaining U.S. citizenship and securing or renewing a green card. The loans are repaid monthly over two to four years. Capital Good Fund staff is fluent in English and Spanish, according to Posner.

• Other personal loans: These loans can be used on costs such as car repairs or security deposits, but not to pay off debt. Loan amounts range from $700 to $2,000 at 24% APR, with monthly repayments over two years.

How to qualify:  You must live in one of the four states where Capital Good Fund operates: Delaware, Florida, Massachusetts and Rhode Island. The lender has plans to expand into Illinois and Texas in 2019.

You must also have a bank account or pre-paid card (such as NetSpend, PayPal or U.S. Money) with two months of statements and income that can be verified, such as with pay stubs or deposits into a bank account.

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.

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 financial coaching and a credit builder program at additional cost.

» 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 20% APR repaid over 36 months would cost $186 per month and carry $1,689 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 payday loan alternatives Oportun, OppLoans and Rise Credit.

However, those lenders are more widely available: Oportun has retail locations in nine states, OppLoans installment loans are available in 15 states and Rise is available in 32 states.

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

After considering alternatives, you may decide that taking a Capital Good Fund loan is your best option. In that case, do what you can to carve out room in your budget to pay the loan off as quickly as possible and to build your emergency savings. For many people, borrowing for emergencies can be an expensive solution.