Though the recession is over, for too many in our community, the economic recovery is little more than a rumor. Unfortunately, the strain of being financially strapped is compounded by predatory lenders who entice people with promises of fast cash, but trap borrowers in an unjust, nearly inescapable cycle of debt. As we have seen in our congregations, this does lasting damage to the financial health and security of our families, our neighborhoods, our city and our country.
A payday loan begins when a vulnerable person sees a sign that says “Quick Cash Now” and believes it. They take out a loan for $478. Two weeks later, that person is faced with the choice of either paying $116 to roll over the loan and give herself two more weeks, or paying the entire sum plus the $116 in fees and interest. What we think of as a loan — borrowing money and paying it back over time in small payments — is not an option. The business model of the payday loan industry is to hold the borrower in debt, collecting large interest and fee payments while the principal remains outstanding.
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