Predatory Lending: Faith Communities Mobilizing to Defend the Vulnerable
Naya Burks, a single parent in St. Louis, took out a $1,000 loan to cope with expenses that couldn’t reliably be paid with the irregular hours at her job. When she was unable to keep up with payments on her high-cost loan, which carried an annual interest rate of 240 percent, the lender sued her and began garnishing her wages, even as interest continued to accrue. Ultimately, that $1,000 loan turned into a $40,000 debt, and it was only during the course of an investigation that the debt was forgiven.
Burks’s story is one among millions of Americans who take out a high-cost predatory loan each year, such as a payday loan pledged against the next paycheck. In Texas alone, there are approximately 3,500 payday lenders, more than there are grocery stores. In Louisiana, payday lenders outnumber McDonalds. In these states and across the country, advocates are increasingly joined by faith leaders, who recognize that predatory loans aren’t just about dollars and cents, but about underlying moral questions.
The above excerpt was originally published in Spotlight on Poverty and Opportunity. Click here to view the full article.
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Director, Consumer Finance
Associate Director, Faith and Progressive Policy Initiative