SAN DIEGO (KGTV) - At the end of the week, many federal government employees may find themselves in a financial bind as they arrive at their first pay period of the shutdown without a paycheck.
Enrique, a federal contractor who did not want to use his last name, created a GoFundMe campaign to cope with the lack of funds. He asked for $5,000 to cover his salary gap, posting a picture of his family to encourage donations.
“This shutdown really affects me because once the shutdown ends I will not get back pay as a contractor,” Enrique said.
Christian Rodriquez is a corrections officer at Metropolitan Correctional Center detention facility in downtown San Diego. His work is deemed essential, so he is working without pay.
"I'm going to have to borrow from family and friends to pay my mortgage, or get a loan," said Rodriguez.
Some institutions, including Navy Federal Credit Union (NFCU), are offering no-interest loans to help workers through the crisis. Other banks, including Chase and Wells Fargo, encouraged affected customers to reach out for assistance.
While some loans may have fair terms, government employees are warned to beware of so-called predatory lenders during the shutdown.
The California Department of Business Oversight (CDBO) has established guidelines to protect borrowers from illegal and improper lending practices. The agency is warning government workers against excessively high fees and commissions, high interest rates, high-cost credit insurance, and refinancing with higher fees, known as “loan flipping”.
CDBO experts have tips for anyone seeking a loan.
- Shop around: Compare interest rates and total costs of loans by several banks and credit unions
- Use caution: Be wary of lenders who contact you first, or offers “only good for a short time”
- Ask questions: You have a legal right to know the total cost of the loan, the APR, monthly payments, and how long you have to pay it back
- Think before you sign: Make sure you understand all documents, and consider having someone else check them