CONSUMER PROTECTIONS ARE ESSENTIAL IN HIGH-INTEREST PAYDAY-LOAN INDUSTRY
If a family falls a little behind, and needs a little cash, a so-called “payday lender” may be more than happy to help out. In Indiana, a down-on-his-or-her-luck applicant can get a two-week loan for up to $605. But the interest rate can be a backbreaking 20 percent for those two weeks – an annual percentage rate as high as 391 percent. And those loans are often made without regard for whether the borrower can repay such high interest.
“It’s a vicious cycle,” said Glenn Tebbe, executive director of the Indiana Catholic Conference.
A loan is taken out to cover one household need but, to repay it, the family has to scramble to pay for another essential. “Two to three weeks later, they’re in the same spot that they would have been,” he said. “It’s really taken advantage of people in vulnerable circumstances.”
According to a release from the Indiana Institute of Working Families, “The average payday borrower takes nine or 10 loans per year, paying over $400 in interest to repeatedly borrow $300. Sixty percent of borrowers in Indiana take out a new loan the same day their old loan is due.”Read Full Story