Faith and Payday Loans
Faith and Payday Loans
Faith, payday loans and the reform of the payday lending industry are the focus of an article in CNS.
Cash advance loans include risks such as very high fees that tally up rapidly and an addictive aspect. “Positive” characteristics that make the loans attractive: lenders very helpful, not many questions asked, fast contract.
Faith-based groups and consumer advocates press on for the reform of the payday lending industry, which counts more than 22,000 stores nationally.
The story is that of a $100 two weeks loan with $15 fee, to pay a utility bill that continued with more short-term loans to cover the precedent one for two more years ending with a total cost between $5,000 and $6,000.
Statistics from Center for Responsible Lending, about consumers who repeatedly take out a loan every few weeks, report a number of 59 million loans a year, with $20 billion out of the $27 billion in annual loans and costs of $3.5 billion in fees.
The payday lending covers the need for small loans of the people with low or moderate wages. However, there is need for regulation of the industry: establishing caps on fees and interest rates.
Faith-based groups identify the high fees of payday loans with the Bible term usury.
Definitions of the term “usury”:
NetSERF: “The interest charged on a loan. Forbidden by church law (based upon biblical).”
Wikipedia: “Usury (, comes from the Medieval Latin usuria, “interest” or “excessive interest”, from the Latin usura “interest”) originally meant the charging of interest on loans. … After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate.”
In Wikipedia, we also find that usury is forbidden in the following religious texts: Old and New Testament, Torah and Qur’an.
A 36% restriction on interest rate is obligatory in 15 states and the District of Columbia. The limit exists also when the consumers are military families.
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