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What allotment loans mean for government employeesAllotment loans provide an option for federal government employees who have bad credit to get a loan with favorable terms. Federal Insights Read more
TrueConnect InsightsHere, you’ll find blog posts crafted to help you understand the advantages of partnering with TrueConnect, tips and tricks on business best practices and current events in the financial benefits industry. Browse through our Insights by clicking the posts below. PSA – TrueConnect does not currently work with Federal Agencies though that may change in the future. We do work with SLED. Allotment loans provide an option for federal government employees who have bad credit to get a loan with favorable terms. There are two types of allotment loans, and they are generally easy for government employees to apply for. Unfortunately, allotment loans are often used by unscrupulous lenders to ensnare low-income government employees, particularly active service military personnel. The Military Lending Act was created to help protect active service members from being taken advantage of by predatory lenders. What is the Military Lending Act?The Military Lending Act (MLA) is a Federal law which provides special provisions and protections for active-duty service members and their spouses and covered dependents. The rights under the MLA include:
In 2015, the Department of Defense expanded these rules to cover all types of credit covered by the MLA. Consumer credit products covered for active service members include:
Although allotment loans were prohibited for enlisted service members, they are still available for other government employees. What to Know About Allotment Loans for Federal EmployeesThere are two types of allotment loans which are available to federal employees. These are:
These allotment loans are planned between the borrower and the lender. This type of loan is easy for Federal government employees to qualify for, even in cases where they have a poor credit record. This is because repayment is guaranteed so long as the borrower is employed by the Federal government. To facilitate repayment, allotment payments are divided between the borrower’s paychecks. Allotment loans for government employees may have some advantages. These include:
Disadvantages of Allotment LoansWhile allotment loans have many advantages for government employees, there are some disadvantages that employers need to be aware of. These include:
Offering installment loans to your employees can be a great benefit to their overall financial wellness, particularly if they are going through a financial crisis because of a sudden family or personal emergency. One of the main benefits of an installment loan for government employees is that the loan does not have to be paid back in full, from the next paycheck, as a payday loan does. This means employees can borrow more without feeling under pressure to pay back the loan in a short amount of time. TrueConnect: An Alternative to Allotment LoansTrueConnect is aware of the need for a responsible lending approach for federal government employees. It’s also important that employees have a better understanding of their loan options and help with making financial decisions in the future. This can help them avoid predatory lenders. TrueConnect is partnering with cities, counties, schools and other government employers to offer an alternate solution to traditional allotment loans. Because TrueConnect’s employee loan programs are offered by employers as a benefit, employees are protected against the hazards of taking loans from predatory lenders. Employees won’t borrow more money than they can pay back, the terms of the loan are fair, employees can receive financial counseling, and their repayments are reported to credit agencies, which can help them improve their credit scores. TrueConnect can help ensure that your employees feel confident that they are getting the help they need to pay their debt. Prev article Next articleYou may also likeWhat is a hardship loan?A hardship loan is a loan to cover an unexpected financial shortfall, either because your expenses went up or your income went down. Hardship loans are not like other loans that are designed to meet an expected or planned need (like a car loan or a business expansion loan).
What is the easiest government loan to get?If you need help paying for school, federal student loans (under the Direct Loan program) are probably your best option. They are easy to qualify for, they have competitive rates, and they offer flexibility when you're getting on your feet (and when you face financial hardships in life).
What credit score do you need for an emergency loan?Great overall emergency loan
To qualify for the lowest available APR of 8.99%, borrowers must have a FICO Score of at least 640 and a minimum annual income of $100,000.
Is an allotment a loan?Allotment loans are a type of loan specifically made for federal employees. Federal employees benefit from low, fixed interest rates, manageable payment terms, and no collateral. Allotment loans are paid by allotting a portion of their monthly salary to pay for the loan.
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