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Predatory Payday Lending

How Do Payday Loans Impact Communities?

Every day across the country, vulnerable Americans walk into payday loan storefronts seeking financial help. They are greeted by welcoming staff who affirm that they have indeed come to the right place for help. A short while later, sometimes within minutes, they are given a loan that they are required to repay in two weeks.

While this may sound like borrowers have received the help they desperately need, they have not. Lenders are intentionally deceptive in their marketing practices and in how much it will actually cost to repay a loan, thus trapping borrowers in a cycle of debt that can last for months and even years.

The collateral consequences of payday loans can devastate families financially, emotionally, and psychologically. As Christian citizens, this should compel us to act to protect vulnerable families and to pursue policies that promote public justice. Government, businesses, families, and the Church all meet at the intersection of payday lending, and each has a role to play in protecting families.

CPJ’s Shared Justice published a detailed report on predatory lending, “What Justice Requires: Protecting Families from Predatory Lending”.

Faith for Just Lending

CPJ convenes Faith for Just Lending, a coalition of faith-based institutions working to end predatory payday lending. The Faith for Just Lending steering committee includes Catholic Charities USA, Center for Public Justice, Cooperative Baptist Fellowship, Ecumenical Poverty Initiative, Ethics & Religious Liberty Commission of the Southern Baptist Convention, Faith in Action (formerly PICO National Network), National Association of Evangelicals, National Baptist Convention USA, National Latino Evangelical Coalition, The Episcopal Church, United Church of Christ, and United States Conference of Catholic Bishops.

Faith for Just Lending provides tools for advocacy to end predatory lending and Principles for Just Lending.

What is a Payday Loan?

A payday loan is typically a two-week loan that ranges from $100 to $500 with exorbitantly high interest rates attached.

Each year nearly 12 million Americans take out a payday loan.

Nearly one in four borrowers receives some form of public assistance, like disability or social security benefits, as an income source, which can be taken by lenders to make payments on the payday loan.

Twelve percent of parents earning less than $50,000 have used a payday loan, compared with four percent of parents earning $50,000 or more.


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