For more than a decade, state and local consumer advocates have challenged triple-digit interest rates on small-dollar loans like payday and car-title. To their combined credit, 14 states and the District of Columbia have enacted laws to limit interest and fees to about 36 percent.
Despite these successful efforts however, the vast majority of the nation still lacks state regulation to protect consumers from predatory lending’s debt trap. Consumers of color and those of modest means who need just a few hundred dollars are often the financial prey that payday lenders love. Now a diverse coalition of Christian leaders are proclaiming that payday lending is not just a legal problem, but a moral one as well. The group also has new data that broadly and consistently supports payday and car-title reform across 30 states where no current regulation exists.
‘Faith for Just Lending’, the official title of the faith-based coalition, released new poll results this week from interviews of 1,000 Christians. The survey found that Blacks are the most likely to know someone who has borrowed a payday loan (58 percent) or have borrowed one themselves (49 percent). Nearly a third of clergy and service providers (35 percent) who know consumers with payday or car title loans had provided money to help pay off or refinance payday or car title debt.