PROGRAM SUMMARY
Why was the loan program started?
In late 2006, the Commonwealth of Virginia Campaign formed a new 501C3 charity to help employees facing an immediate crisis in their family. Through the donations of employees to the Virginia State Employee Emergency Fund, grants were made to employees facing an unplanned financial need caused by serious illness of a loved one, storm damage to their home, or funeral expenses.
It became obvious that some employees needed a different form of assistance caused by events that that were non-emergencies but required some financial help to weather tough times. This new program is designed to help employees fill the financial gap through short term loans.
The Virginia Credit Union, CVC’s partner in the loan program, has been assisting state employees with their financial needs for more than 80 years.
Are my CVC contributions used to fund the loan program?
If you designated your contribution to go to specific charities, 100 percent of the designated amount will go to the charities you selected. If you do not designate a charity, your contribution goes to pay a portion of the 5 percent administrative fee to operate the CVC. The balance is distributed proportionately to charities.
Funding for the loan program comes from the Virginia Credit Union. No state funds are loaned to employees. No donations to the CVC are loaned to employees.
PROGRAM ELIGIBILITY
Who is eligible for Virginia State Loan Program?
To be eligible for Virginia State Employees Loan Program you must be active full-time state employee who has been employed with the Commonwealth for at least 12 months. Employees should be paid semi-monthly or monthly. Employees on other pay schedules or without a state-issued ID number are not eligible at this time. Employees at Independent agencies, wage employees, and independent agency employees are not eligible at this time. As the program grows, we hope to add more employee groups to the program.
If you are not currently eligible for the loan program, you may be eligible for other types of personal loans offered by the Virginia Credit Union.
Employees must agree to direct deposit for loan payments once the loan is approved. When completing the application, be sure to use your state-assigned employee ID number, not your Social Security number. Your Employee ID number may be found on your health benefits card directly below your name. Enter only the seven digits and not any letters.
COST OF A VSELP LOAN
What is the Annual Percentage Rate (APR) on these loans and how does it compare to some other lenders’ rates?
The Annual Percentage Rate on the Virginia State Employee Loan Program (VSELP) Loan is 24.99% and there is no loan fee on top of that, such as those charged by some other lenders. Interest is calculated daily on the declining loan balance. This means an employee could pay the loan off at any time and reduce the total amount of interest he or she would pay. See comparison chart.
The loan payments are spread over an approximate six-month term to enable a state employee to pay off the loan through small regular payments, rather than having to come up with a lump sum to pay the loan at one time.
On a $100 VSELP loan repaid each semi-monthly payday over a six-month term, an employee would pay approximately $8-$9 in total interest depending on the number of days between their payments. Total repayment would be approximately $108-$109.
On a $500 VSELP loan repaid each semi-monthly payday over a six-month term, an employee would pay approximately $40-$45 in total interest depending on the number of days between their payments.
The total amount of interest paid on a VSELP loan is much less than the total cost an employee might pay some other lenders for a short-term loan. Depending on the type of loan an employee might get from a lender, the Annual Percentage Rate could be considerably higher. Virginia law allows some lenders to charge interest plus a loan origination fee of not more than 20% of the loan proceeds, and a $5 verification fee. For a $500 loan, this would result in paying $112 in interest and fees plus the repayment of the loan amount of $500, yielding a 584% APR cost. See comparison chart.
In addition to paying a lower cost for a VSELP loan, this loan program gives the employee an opportunity to repay the loan over a longer period of time while gaining financial education that will help them in making future financial decisions.
What are the loan amounts and payment amounts?
| Loan Amount | Monthly Payment | Payment Amount Each Pay if Paid Semi-Monthly |
| $100 | $20 | $10 |
| $200 | $38 | $19 |
| $300 | $56 | $28 |
| $400 | $74 | $37 |
| $500 | $92 | $46 |
PERSONAL FINANCE
What if loan funds are not enough for my needs?
This program will not allow employees to receive more than $500 per loan. However, state employees who have great financial need may want to consult their local social services department, area nonprofits/religious organizations, or call 2-1-1 (which is a referral service for those in need).
How many times can I apply to this program?
No more than two loans per calendar year. You may have only one program loan at a time.
Will I be required to share the purpose for this loan?
The purpose of the loan will be requested but details are not required.
What if I have bad credit?
There is no credit check or reporting to credit bureaus on these loans. This is a good way to get back on track financially.
Where does the money come from to loan to employees? Is this taking away from money I donated to a charity through the CVC?
The Virginia Credit Union, our partner in this program, is making this loan program (and the funds to loan) accessible to state employees across the Commonwealth. No money that was designated to charities or gifts to charities or are being used. VACU is the lender.
I’m not a member of the credit union? Can I still get a loan?
Being a credit union member is required to receive any type of loan from a credit union. Credit Unions operate in the not-for-profit financial arena and depend on deposits from members to have money available for all types of loan products. It is simple to become a member of the VACU. Go to www.vacu.org.
DENIED LOANS
What are some reasons I could be denied funds?
Applicants may be declined for the Virginia State Employees Loan Program loan if you are not a member in good standing with the Virginia Credit Union or if you do not meet other requirements for the loan. (See Loan Check List)
Funds will not be made available to you if your payroll direct deposit has not been confirmed by your payroll officer.
Can I have another loan open with the Virginia Credit Union and still apply to the Virginia State Employee Loan Program?
You may have another VACU loan outstanding while applying to Virginia State Employees Loan Program but your loan cannot be delinquent. Employees can only have one open Virginia State Employees Loan Program loan at a time (two loans maximum per calendar year)
How will I be notified if I have been approved for the loan?
When your application is approved and you have delivered (or faxed) your direct deposit form to your payroll office, someone at the payroll office will send an email to the loan processor acknowledging that you have completed the direct deposit form. This email may be sent by payroll immediately and does not have to happen after the direct deposit information has been entered into the Payroll system. Sending the email confirmation and entering the data into a payroll system do not have to occur in the same day.
Funds will appear in your VACU account within 24-48 hours of Payroll sending a confirmation notice to the loan processor. If you provided an email address when you completed the application, you will receive an email notification when your loan is approved. Once payroll has emailed the loan processor that she/he has the direct deposit form, funds are generally place in your account within 4 to 48 hours.
How will the funds be made available?
Once applications are submitted, employees will sign and submit their Virginia State Employees Loan Program direct deposit form (generated by the online application) to their payroll officer. Once processed, your payroll officer will notify the Virginia State Employees Loan Program administrator via email that the payroll deduction has been established or confirmed. Loan funds will be deposited to the employee’s VACU account once all requirements are fulfilled.
How long do I have to repay my loan?
The program allows employees up to six months to repay funds via direct deposit.
How will I be required to repay these funds?
You must complete a Virginia State Employees Loan Program direct deposit form with a deposit amount sufficient to cover the amount of the loan payment for each pay day. The payment amount is withdrawn from your VACU savings or checking account and transferred to the loan account automatically. This form is prefilled for you during the online application to help employees with the process. You need to take (or fax) the direct deposit form to your payroll office before the loan amounts will be posted to your account.
When will my first payment to the Virginia Credit Union be due?
If your loan is funded (loan funds placed in your VACU account) prior to the 15th of the month, your first full payment will be due on the 16th of the following month. This means that there would need to be a direct deposit payment on the 31st/1st of the month following the receiving of the loan proceeds and a second one on the 15th (next payday after the first transfer payment). The loan then becomes in default on the 19th of the month after which you received the funds.
For an example, John Smith had a loan funded on August 13. His first direct deposit payment to his VACU account should ne no later than the Sept. 1 paycheck and the second on the Sept. 15th/16th paycheck. The VACU program will sweep for the $46 (assuming $500 loan) on each payday. If your payroll office does not set up the direct deposit payment for the first of the month (Sept. 1 in this example) you are still responsible for the $46 payment to be in your VACU account. Questions regarding this may be directed to the Credit Union at 804-323-6000 extension 1728.
May I pay off my Virginia State Employees Loan Program loan early without any prepayment penalty?
Yes. Since interest is calculated on the outstanding daily balance, the sooner you pay off the loan, the less interest you will pay. To repay the loan early, go to a VACU branch so they can calculate the payoff amount for you.
What if I receive a layoff notice?
When an employee with a VSELP loan is separated from their agency for any reason, including termination, resignation, separation, and furloughs, the total balance due on the loan will be immediately due and will be subtracted from your next paycheck.
Will my direct deposit for the Virginia State Employees Loan Program loan payment automatically stop once the loan is paid off?
No, the funds will continue to go to the savings or checking account you had designated until you change your direct deposit with your payroll officer. You may want to continue the deposit to build your savings.
How can I contact the Virginia State Employees Loan Program Loan office?
Email VaEmpLoans@dhrm.virginia.gov and indicate your name, daytime phone number, and your employee ID number so your loan can be researched before you receive a response.