Payday Loans and the need for Just Lending

It’s a start. I was pleased to hear that the Springfield City Council has agreed to place the Payday Loans issue on their legislative agenda for the upcoming year.

There is agreement among faith leaders in our community that payday loans exploit at risk families who are at or below the poverty level. It is encouraging to me that this kind of support has been found among Baptists as well. I never thought I would see the day when the Southern Baptist Convention and the Cooperative Baptist Fellowship could agree on an issue and work together.

I recently attended a gathering of Faith Voices of Southwest Missouri, an organization that desires to bring human dignity to the center of public life. Our lunch meeting focused on the question “What Can Springfield Do About Predatory Lending in our City?” We listened to a cross section of political and religious leaders, a panel discussion, and also the personal stories of two individuals whose lives have been affected by payday loans. One woman in particular lamented the need for a payday loan of $200 in order to travel to St. Louis for a medical procedure. She is unable to repay this amount because she can’t even keep up with the interest rate. It has created an embarrassing and shameful predicament for her and her family.

These kinds of stories need to be heard. It is not easy to talk about one’s personal and financial troubles in front of a crowd. But, the willingness to share the stress and anxiety created by payday loans is vital to moving faith groups and politicians to act.

I wasn’t tuned in to the ongoing damage that payday loan companies caused until I started listening to the stories. The number of families impacted is staggering. More than 20,000 payday and car title loan stores operate in our country. Many of these lenders can offer loans at 300% APR and higher because they are not regulated in the same manner as banks and credit unions.

The most remarkable discovery I made relates to the intent of payday loan companies. Their loans are predatory in nature and are extended to those who are most vulnerable and unable to pay. Payday loan companies provide money not on the borrower’s ability to pay, but rather on the loan company’s ability to collect. These companies charge astronomical rates of interest for their loans, often keeping borrowers in a perpetual cycle of crushing debt.

Our church has begun a process of education and information about payday loans. Part of this process has been working with Faith Voices of Southwest Missouri to discern what is happening on a personal and community level to those who are being affected by this practice. We are looking into ways to offer solutions in partnership with lending agencies like credit unions. It is important to offer personal, spiritual, and financial assistance to persons who need to escape the trap of payday loans. I am hopeful that with the council’s support and involvement, our community can respond in a productive manner.

In thinking of our own church’s efforts, I began to realize that more churches like ours could get involved in this important social issue. Many people are suffering under the weight of predatory loans. I have been hopeful that more pastors and congregations could come together and agree that something should be done about this immoral practice. It is easy enough to find controversial issues which can divide us as a faith community. It is time to unite and find common ground in helping those who are the most in need.

There are numerous examples in the Bible about treating the poor with respect. There are admonitions to help those who are weak and helpless, and to fight for justice for the oppressed. I’m hopeful that we are seeing this take place on this issue, but there is much work to be done.

My challenge for fellow pastors is to get educated on payday loans. Find out who is most affected by the debt trap that is set by payday loan companies. Join me in looking for ways to change existing laws to require regulation so that reasonable interest rates are charged. This should based on an ability to repay within the original loan period, mindful of the borrower’s income and expenses.

On a positive note, I was encouraged to learn that the Consumer Financial Protection Bureau is preparing to issue new rules regarding payday lending practices in the upcoming year. Let’s work together to make these regulations as strong as possible so that these immoral business practices will no longer take advantage of the poor and least among us.

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