By Charlene Crowell
For more than a decade, state and local consumer advocates have challenged triple-digit interest rates on small-dollar loans like payday and car-title. To their combined credit, 14 states and the District of Columbia have enacted laws to limit interest and fees to about 36 percent.
Despite these successful efforts however, the vast majority of the nation still lacks state regulation to protect consumers from predatory lending’s debt trap. Consumers of color and those of modest means who need just a few hundred dollars are often the financial prey that payday lenders love.
Now a diverse coalition of Christian leaders are proclaiming that payday lending is not just a legal problem, but a moral one as well. The group also has new data that broadly and consistently supports payday and car-title reform across 30 states where no current regulation exists.
‘Faith for Just Lending’, the official title of the faith-based coalition, released new poll results this week from interviews of 1,000 Christians. The survey found that Blacks are the most likely to know someone who has borrowed a payday loan (58 percent) or have borrowed one themselves (49 percent). Nearly a third of clergy and service providers (35 percent) who know consumers with payday or car title loans had provided money to help pay off or refinance payday or car title debt.
“Communities already suffering due to economic inequities are falling prey to these financial predators,” noted Rev. Dr. Cassandra Gould, a coalition member with Missouri Faith Voices and also the PICO National Network. “As a pastor, I have become aware of the cycle of shame . . . The real culprits are these unregulated profiteers who are extracting wealth from families. They are contributing to the poor health of communities and individuals.”
Further findings reveal:
- Nearly 90 percent of respondents felt payday loans “mostly hurt” borrowers;
- 84 percent witnessed an increased need for emergency assistance after a payday loan was used; and
- The most common descriptions of payday loans were “expensive,” “harmful” and “predatory.”
“Exploiting the poor while pretending to serve them is a greedy and sinful business,” said Rev. Dr. George Mason, Senior Pastor of Dallas’ Wilshire Baptist Church and a member of the Cooperative Baptist Fellowship.
The coalition also stressed the need for consumers to have access to fair and responsible small dollars loans.
“Ethical lending is an honorable business,” noted Galen Cary, Vice-President for Governmental Relations with the National Association of Evangelicals, “but ensnaring vulnerable people in debt traps is not. We need just laws and regulations that meet legitimate needs while preventing the egregious abuses that are now committed by too many payday lenders.”
The Center for Public Justice, National Baptist Convention, USA, Inc., National Latino Evangelical Center for Public Justice, PICO National Network, the Ecumenical Poverty Initiative and the Ethics and Religious Liberty Commission are also members of Faith for Just Lending.
Four lending principles guide the coalition’s agenda and call for specific accountability standards for all stakeholders:
Lenders should extend loans at reasonable interest rates based on ability to repay within the original loan period, taking into account the borrower’s income and expenses;
Government should prohibit usury and predatory or deceptive lending practices;
Individuals should manage their resources responsibly and conduct their affairs ethnically, saving for emergencies and being willing to provide support to others in need; and
Churches should teach and model responsible stewardship, offering help to neighbors in times of crisis.
“Predation, poverty and poor health is the unholy trinity residing in impoverished communities,” concluded Dr. Gould.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.