Clergy working to help desperate avoid borrowing trouble through payday loans – Springfield News
When Phil Snider began to hear from church members about their struggles to pay off small “payday loans,” he decided he wanted to know more about the issue.
This week, the pastor of Brentwood Christian Church will be among clergy from around the state to meet in Jefferson City to learn about predatory lending practices in Missouri.
“I am trying to find a way to advocate on behalf of those in desperate financial situations so they don’t become even more desperate,” said Snider, who is helping to organize area clergy to attend the launch of the 2012 Economic Dignity Campaign at the state Capitol Thursday.
The event will include theological reflections as well as an opportunity to sign on to a covenant supporting an interest rate cap of 36 percent, said Eva Schulte with Community Creating Opportunity in Kansas City and the statewide network Missouri Faith Voices, which are hosting the event.
The rate cap is based on an existing federal cap for military and the FDIC’s determination that any rate above 36 percent is predatory, she said.
Cycle of debt
Payday loans are small, short-term loans that are secured by a borrower’s personal check and must be paid by the person’s next paycheck. Although the cost of a loan is typically about $17 for every $100 borrowed, that cost translates into an annual percentage rate (APR) of 445 percent for a two-week loan.
If the borrower cannot pay the loan back in full in that short period, the loan can easily be refinanced for another two weeks, creating a cycle of debt that can lead to costs that exceed 1,000 percent of the original loan amount.
A report to the Missouri General Assembly showed that 2.43 million payday loans were made in the state in January 2011, with an average APR paid of 444 percent. The average loan amount was only $307.56.
A study by the Better Business Bureau in 2009 concluded, “Missouri’s weak payday loan laws have attracted major out-of-state lenders to engage in predatory lending, costing Missourians who can least afford it millions of dollars a year.”
“The issue of unfair lending practices is one that every denomination or faith person can get behind and come together around,” said the Rev. Bart Hildreth, superintendent for the Ozarks North District of the United Methodist Church and a member of the board of directors of Missouri Faith Voices. “Speaking out of a … Judeo-Christian tradition, it’s one that really is supported by biblical notions of justice.”
Hildreth is working to organize local clergy around the issue. “This is one issue in which persons across the faith traditions can most clearly come together,” he said. “There is just so much about Missouri law right now that leads to a real unfairness. I believe that Americans believe in people being treated fairly.”
Roger Ray
One area clergyman who has been outspoken on the issue of payday loans is the Rev. Roger Ray. It is a subject that first came to his attention about 10 years ago when another pastor challenged him to write about it in one of his regular columns in the News-Leader.
“I had not paid much attention to them (at the time),” he admitted. “Then I did some research.
Once he began writing against the practice, he heard from people from across the country, including people in Springfield.
He organized demonstrations, wrote columns, contacted legislators and visited with Gov. Jay Nixon when he was running for that office.
Ray has seen little response in Jefferson City.
“Capping these interest rates would not have cost the state anything and done a lot for poor people,” said Ray, who will not be able to attend the Thursday event because he will be away on a mission trip but said he would definitely participate in the effort.
For Snider, it makes sense to ask clergy to take their concerns to the legislature “in a state that’s always talking about biblical values.”
He is asking area clergy to join him on the trip to Jefferson City Thursday to learn more about the issues around payday loans and other predatory lending practices in Missouri.
Hildreth promises the event will provide “information about lending practices and the law in the state of Missouri … strategies for persons of faith to come together and … connect with other persons of faith commitments who likewise care about how the poor are treated.”
Article source: http://www.news-leader.com/article/20120107/LIFE07/201070310/0/SCENE0202/?odyssey=nav%7Chead
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