Time to Shut Down Payday Predators

The Center for Responsible Lending has a compelling story about the need to close down the legalized loan shark industry:

Anita Monti wanted to get her grandchildren presents for Christmas. She couldn’t afford them, so she took out a payday loan from Advance America. The company promised a quick fix. Instead, the grandmother “went through hell” for several months as she was trapped in a cycle of debt. During this time, she had to get help from her church to make her rent payment. What was marketed as a small loan ended up costing Anita nearly $2,000.

Anita’s story is hardly a fluke. Trapping customers in a debt spiral is central to payday lenders’ business model — as a single graphic found in the employee training manual of one of the industry leaders makes clear.

In fact, government researchers found “[m]ore than four out of every five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter.” Researchers also discovered that the great majority of these businesses’ revenue derives from people with more than ten loans in a year.

In describing the experience, Anita said, “I just thought that I was a on a merry-go-round that I was never going to get off.”

Payday lenders seize money directly from borrowers’ paychecks, a frightening level of control over people’s lives.




For more on our work to rein-in payday predators, follow @TNCitizenAction



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