VOICE leaders shine light on predatory lending in state
[Excerpts]
It’s fairly common knowledge that payday loans are expensive and dangerous. In Oklahoma, where a payday lender can charge $15 for every $100 borrowed on a two-week $300 loan, the annual percentage rate is 391 percent. Payday lenders require either a post-dated check or banking information to enter into a loan agreement.
The issues surrounding payday and signature loans are hotly discussed in Oklahoma, where payday lenders serve about one in every eight adults – the nation’s highest usage rate, according to the Pew Charitable Trust, an independent organization that analyzes data and determines trends in lending. Further, the payday loan industry collected more than $52 million in fees and interest from Oklahoma borrowers in 2014, according to the Center for Responsible Lending.
Locally, [VOICE,] a coalition of faith and nonprofit leaders have raised opposition to what they view as predatory lending hurting vulnerable Oklahomans. In recent years, a majority of Oklahoma lawmakers have supported legislative efforts to grow the industry with new loan products, which they say will increase options for Oklahomans with poor credit ratings.
For those not living close to the edge, or living paycheck-to-paycheck like an estimated 76 percent of Americans, it’s hard to understand why a person would borrow a relatively small amount of money at such a high-interest rate. For that reason, Rev. Tim Luschen of northwest Oklahoma City’s St. Charles Borromeo Catholic Church [and a leader with VOICE] often asks people to imagine needing a couple hundred dollars to cover a financial emergency. With no savings, no credit cards and no family or friends to help, where does one turn?
“Some people think, ‘I will go get a payday loan. It’s money and it’s available. I will pay it off in two weeks when my situation changes,’” said Luschen, who is a leader in Voices Organized in Civic Engagement (VOICE), a coalition of congregations and nonprofits in the Oklahoma City metro advocating for tighter lending regulations. “Unfortunately, for many people who are in a payday-to-payday situation, their situation doesn’t change in two weeks. Their funds are tight and they can’t pay the loan back.” . . .
Of the 48 payday loan businesses operating in the Oklahoma City metro, 33 received their license in 2003, according to the department’s records. Out-of-state owners control all but one payday loan business. . . .
VOICE leaders also agree a key aspect to the state’s lending issues are the conditions that lead people to seek the small and expensive loans.
“People are struggling financially,” Luschen said. “We’ve seen that the state has cut its budget on social support, meaning that people, especially the most vulnerable, are really under pressure.”
