Meet Ur Planet

Main Menu

  • Home
  • Plane boarding
  • Tourist guide
  • Hotel accommodation
  • Travel booking
  • Vacation rentals

Meet Ur Planet

Header Banner

Meet Ur Planet

  • Home
  • Plane boarding
  • Tourist guide
  • Hotel accommodation
  • Travel booking
  • Vacation rentals
Vacation rentals
Home›Vacation rentals›Groups want lawmakers to act on high-cost loans

Groups want lawmakers to act on high-cost loans

By Meg P. Sousa
March 28, 2022
0
0

Leaders of two organizations that recently launched an alternative to payday loans now hope to lay the groundwork for changes to state law after releasing a new report about how predatory moneylenders imprison debt-ridden Memphians.

“These payday lenders are having a huge impact on our people and their way of life,” said Shirley Bondon, executive director of the Memphis Black Clergy Collaborativewho published the report with Political Institute of Hope. “In a community like Memphis where people are already living in poverty, it’s easy to exploit them and so we’re trying to find a way to lift people out of poverty and end that kind of exploitation.”

The report examines “high cost loans,” including payday loans, car title loans, and flex loans. Although the terms of these loans are different, the exploitation and harm are the same as they come with extreme interest rates, unfair repayment terms and “coercive” repayment methods, such as access directly to someone’s bank account, the report said.

Additionally, many lenders do not check whether someone can afford to repay the loan without worsening their financial situation, creating a “trap”, the report says. At least 75% of the money generated from payday loans comes from people who take out more than 10 loans a year, the report says.

Nearly half of car title loans in Tennessee defaulted in 2019, meaning loan companies repossessed more than 11,000 cars.

High-Cost Debt Traps Widen Racial Wealth Gap in Memphis, Report

And the moment the borrower can afford to break out of the cycle, “…[T]They will then be subject to insufficient funds charges, aggressive debt collection and ultimately the closure of bank accounts or bankruptcy.

For car title loans, the cost may be someone’s transportation. Nearly half of car title loans in Tennessee defaulted in 2019, the most recent year for which data is available, meaning loan companies repossessed more than 11,000 cars, according to the report.

But it also hurts more than the borrower’s bank account.

“These damages are neither exclusive nor exhaustive and extend to the psychological stress caused by unaffordable debt, the pressure exerted on other members of the community and family and the resulting inability to create wealth in the future,” the report said.

Memphis has 114 such storefronts, most owned by out-of-state businesses. Populus Financial Group, Inc./Ace Cash Express of Texas has 29 locations, and TitleMax/TMX Financing of Georgia has 23.

In Memphis, which is two-thirds black, just over one in three residents are either unbanked, meaning they don’t have a bank account, or underbanked, meaning they use financial services such as payday loans in addition to traditional banks, according to Prosperity Now To analyse federal data from 2017.

“…they target a certain group of people and that’s a continuation of the systemic inequalities that we see in our communities.”

Shirley Bondon, executive director of the Black Clergy Collaborative of Memphis

High-cost lenders are concentrated in low-income black and brown areas, the report says. This includes neighborhood postcodes such as Whitehaven, Hickory Hill, Orange Mound, Raleigh and Berclair. Some suburban ZIP codes, such as Germantown and Collierville, have none of these lenders.

“That tells you they’re targeting a certain group of people and that’s a continuation of the systemic inequalities that we see in our communities,” Bondon said.

A payday lender in a mall along Getwell Avenue. Photo by Andrea Morales for MLK50

State Senator Raumesh Akbari sees the inequity of financial services offered in the same communities that predatory lenders target, she said in a statement. It’s hard for Democrats to pass legislation through the majority Republican-controlled Legislature, Akbari said, so she sees value in educating voters about the dangers of high-cost lending.

“In the current political environment at the State Capitol, reform that empowers consumers is difficult to achieve. But we have made some inroads in advocating for better financial literacy education accessible to all students and all adults who want it We want people to understand the true cost of their financial options.

Despite the legislative challenge, Bondon is confident that predatory lending protections can draw support from both sides. She hopes the report will educate community members, but wants lawmakers to read it as well.

“On this issue, I think you will get bipartisan support. I’m not naive in that it’s hard to get Shelby County legislation. But this problem is statewide…it’s not just a Shelby County problem.

Bondon said the state is the next level of government empowered to regulate the industry. The city and county did everything they could, she said.

In 2009, city and county lawmakers adopted a joint order preventing new lenders from opening within 1,000 feet of people’s homes. And in 2020, the Memphis City Council passed a resolution asking the state to effectively ban the industry.

With these high cost loans, borrowers have to repay the full amount plus extreme interest within two weeks or the next payday.

In Tennessee, the maximum loan amount is $425 and the interest rate is almost 460%.

The report recommends a limit on the interest rate for these loans. Interest rate caps have been used by other states, including Arkansas, where the limit is 17%.

“It takes many voices to pass legislation and because it affects so many people, we don’t just want the clergy, we want others to be involved in this fight with us,” Bondon said.

One voice is Josh Spickler, executive director of fair city, a criminal justice reform organization. Spickler wants to see legislation aimed at an industry he says claims to be a useful emergency service.

“But the reality is that most of the time this industry pushes people further into poverty and keeps them there.”

In this way, he said the payday loan industry is like the criminal justice system. Payday loans are often used to cover legal costs, he noted.

“It’s a system that works to exacerbate poverty, not alleviate it. The criminal justice system is not intended to drive people into poverty, that is not its stated purpose, but that is what it does.

Carrington J. Tatum is a corps member of Report for America, a national service program that places reporters in local newsrooms. Email him at [email protected]


This story is brought to you by MLK50: Justice through Journalism, a nonprofit newsroom focused on poverty, power, and politics in Memphis. Support independent journalism by making a tax deductible donation today. MLK50 is also supported by these generous donors.

Do you have an idea for an article, advice or a comment? Email [email protected]

Related

Related posts:

  1. Nine-year-old Khloe Joiner’s mission to donate £1million
  2. These Arms Are Snakes release rarities compilation (splatter vinyl pre-order and new video)
  3. MANDEL: The killer is sentenced to life without the possibility of parole for 18 years
  4. NFL LEGEND PARTNERS WITH NON-PROFIT

Categories

  • Hotel accommodation
  • Plane boarding
  • Tourist guide
  • Travel booking
  • Vacation rentals

Recent Posts

  • Ice Poseidon explains his side of the infamous plane crash that led to Twitch’s ban
  • Beware of Claims of Financial Inclusion Amid Cryptocurrency
  • Why the middle seat passenger should have both armrests on the plane
  • Flip-flops and other clothing items that could get you banned from flying
  • Virginia Court Approved $489 Million in Aid for Victims of Illegal Internet Payday Loans

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • March 2018
  • February 2018
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • January 2017
  • December 2016
  • September 2016
  • April 2016
  • March 2016
  • February 2016
  • November 2015
  • October 2015
  • August 2015
  • July 2015
  • June 2015
  • April 2015
  • June 2014
  • April 2014
  • March 2014
  • August 2013
  • July 2013
  • April 2013
  • September 2012
  • March 2012
  • February 2011
  • June 2009
  • Privacy Policy
  • Terms and Conditions