Tuesday, April 12, 2011

Payday loans. . .local action now!

Even though the state battle to provide more robust regulation of the payday lending industry is about over, a very important local effort is still very much in play.  Read what follows and then take personal action to help in our efforts to protect our low-income neighbors.

STOP PREDATORY LENDING IN DALLAS

Predatory lending is a big problem across Dallas. In recent years, the number of auto title and payday lending locations has exploded and now over 200 storefronts exist within the city.

Payday and auto title lenders have found a loophole to escape state licensing and are “legally” able to charge outrageous rates, trapping many people in cycles of debt while draining community resources. The Texas Legislature must ultimately act to regulate these lenders so that their practices are fair and reasonable; however, since there is a heavy concentration of these locations in Dallas neighborhoods – particularly in areas already struggling economically -- the Anti-Poverty Coalition of Greater Dallas is calling on the City of Dallas to take action and reduce the negative impact of these lenders through a strong zoning ordinance.

These loans create a treadmill of debt. Few borrowers can repay the loan in full, plus interest, and pay for other monthly expenses. Thus, borrowers must to re-borrow, or “rollover”, the loan in order to fill the gap in their budget created by their loan. None of the rollover payments apply towards the loan principal, so the cost to borrow the money frequently exceeds the original loan principal. Over half of payday borrowers rollover at least once before they pay the loan off – and nearly one in four borrowers rollover loans multiple times.

The average payday borrower pays $840 for a $300 loan. 

Because payday loans are secured by a borrower’s post dated check, payday lenders can hold borrowers’ bank accounts hostage.

If the borrower cannot pay in full or the exorbitant fee to rollover the loan, they will face heavy charges from both the payday lender and from their bank in overdraft charges.

Fees for a one-month $4,000 auto title loan exceed $1,000. This $1,000 fee must be paid every month until the loan is paid in full, or a missed payment can result in repossession of the car.

Last year, nearly 200,000 vehicle liens were filed in Texas by unlicensed auto title lenders.

TAKE ACTION

Contact your State Senator and Representative to tell them that you support Texas regulating payday and auto title lenders.

Sign the petition asking the City of Dallas to enact an ordinance to lessen the concentration of payday and auto title stores and reduce their harmful impact on our neighborhoods.
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THE ANTI-POVERTY COALITION OF GREATER DALLAS

The Anti-Poverty Coalition of Greater Dallas is a new coalition that seeks to move 250,000 people out of poverty permanently by 2020 by coordinating efforts to keep people from falling into poverty and increasing pathways out of poverty. We are a broad-based coalition that unites the business community, faith-based organizations, social service agencies, and foundations. Join our fight today!

9 comments:

Anonymous said...

In my opinion there folks are criminals. More power to you. We have the same problem in Memphis.

Richard Corum

Kathy said...

i've gotten three of these loans in the past year, and i can tell you from experience that they were LIFESAVERS! my car got totaled in an accident on i-35 and the insurance company of the at-fault driver didn't pay me enough to get a reliable car because they knew i was desperate and would take whatever they gave me. well, i still had to rent a car for the weekend and my credit is shot, so i needed cash to pay for it. thank goodness i could get cash immediately and was allowed to pay it off over 10 installments otherwise i would have lost my job and then who knows what other bills i wouldnt have been able to pay. what if payday lenders went away?! or if they couldn't make enough money off of people like me to give me loans because they have to charge rates like the banks do? please dont take my options away from me!

Anonymous said...

Wow - Kathy sounds just like the payday lenders themselves. One might almost suspect it is.

Kathy said...

im not the one posting as "anonymous".

look...nobody likes paying astronomical APR's...but that train left my station a long time ago due to my bad financial and relationship decisions. i'm a realist, and i know that nothing in life is free. i'm just glad i still live in a country where i'm free to make my own decisions. and if i decide that i want to pay extra interest for the convenience, i don't want some anonymous do-gooder to tell me i can't! got it?

hann said...

Talking in regards to the on-line payday mortgage, you must pay attention to fraudulent websites that guarantees you guaranteed payday loans but really they takes all the knowledge from you and typically your credit card particulars and the remainder is history.

Tutti said...
This comment has been removed by the author.
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