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“Jennifer Trogdon is a mother of five, four with special needs. Her husband works at a fast food restaurant making a little more than minimum wage. She is on disability.

The 39-year-old Springfield woman says her family is trapped, struggling to break free from payday and car title loans.

“It started off with a vehicle repair,” she said. “You don’t qualify for a loan at the bank so you take out this payday loan. They explain it to you and you think it’s not going to be a problem paying back, but you really don’t comprehend it fully. And not having any other option, what else are you supposed to do?”

Trogdon’s dilemma  is too common in Springfield, according to members of the Impacting Poverty Commission who took direct aim at what they refer to as “predatory lending institutions.”

The commission issued a call to action for the community’s financial and nonprofit sectors: Work collaboratively to  provide lower-interest, alternative loan options.

So far, two Springfield-based organizations have committed to doing just that.

University Heights Baptist Church members dug into their pockets to raise $6,000 for the “University Hope” account at Educational Community Credit Union on East Grand Street. The goal is to raise another $14,000.

And CU Community Credit Union announced Tuesday it will receive a $1.9 million grant in early 2016 to create the “Fresh Start Loan Program.”

Both programs offer small, short-term loans with reasonable interest rates and fees without credit checks. To qualify for either program, the person must have some source of income.

“We talk with them about their finances and their ability to repay,” said Bob Perry, with University Heights Baptist Church. “Typically we are looking at the working poor or retired people.”

In addition to helping folks break the payday loan cycle, the programs help rebuild bad credit, which is often the reason people turn to payday lending institutions in the first place.

Missouri has done little to cap the interest rates that payday and title loan institutions can charge. The average interest rate is 450 percent annually, and many lenders don’t allow borrowers to pay toward the principal amount of the loan: it’s either pay the interest payment and fees or pay the entire loan off.

Lenders justify the high rates and strict rules because they offer small loans with no credit checks — something most banks can’t afford to do.

University Hope

A group of University Heights church members began studying the local poverty problem back in April. To educate themselves, the group attended a poverty simulation, rode city buses, read books and watched videos about the issue.

“We decided to focus our efforts on the working poor and felt we could do something proactive about payday loans,” Perry said in an email. “We felt our church could do something to make a difference for at least a few people. We started with $1,000 from the Deacons’ Benevolence Fund, then we had about 6 church members give $1,000 each to the cause.”

People can borrow small amounts and not worry about a credit check because their loan through Educational Community Credit Union is backed by money in the University Hope fund.

The credit union makes loan. The church’s University Hope fund provides collateral to back the loan.

When the fund reaches the goal amount of $20,000, Perry said it will be able to provide small “rescue loans” to about 40 people at a time.

Less than a month old, the University Hope program has helped three families so far.

The Trogdon family is one of them. For the first time in a couple of years, Jennifer Trogdon has hope of breaking the loan cycle.”

Read more at: News Leader

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“Payday lenders say they provide a service to people who need quick money. What they don’t say is that paying 400 percent interest on loans that roll over and pile up debt at the speed of light is anything but a service.

One year into its existence, the Community Loan Center of Dallas is showing success as an innovative employer-based alternative to payday lenders and their high-interest rate and fees. And now a hefty $1.5 million grant from JP Morgan Chase will assist the center in dramatically expanding help to borrowers who are unable to qualify for traditional loans.

CLC and programs like it are important affordable options for small-dollar borrowers. Once in their clutches, payday lenders make it almost impossible for struggling borrowers to get back on their feet. Their business model depends on those borrowers being unable to repay loans in a timely fashion. That’s bad news if you are living from paycheck to paycheck. The cycle of debt multiplies week to week, making a bad situation worse.

CLC is one of several embryonic, experimental programs in Texas and beyond aimed at combatting abusive payday lending. It’s especially promising because it partners in an unusual way with employers.

Here’s how this program works. Your car needs a new radiator, but you don’t have the money. If you are enrolled with CLC through your participating employer, you would be able to borrow up to $1,000 from the center. You’ll have one year to repay the loan, which is capped at an 18 percent interest rate. Even at that rate, this is a much more affordable and safer deal than going to a payday lender. Plus, CLC allows loan installment payments to be taken directly from your paycheck, much like health care premiums, child support or United Way contributions.

The concept started four years ago in Brownsville and expanded to North Texas last year when the city of Dallas signed on as a major employer partner. Since then, CLC has made 1,263 loans totaling $1.2 million to local borrowers. JP Morgan’s grant doubles the center’s lending capacity and allows it to add several new employers.

Long term, CLC’s success depends on its ability to recruit employers and financial backers willing to sponsor the small-loan program as part of employee benefit packages. Employers, especially those with many workers of modest means, would be wise to consider this program. All employers have to do is verify employment and help with payroll deduction paperwork.”

Read more at: Dallas News

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SPRINGFIELD, Mo. – CU Community Credit Union rolled out the Fresh Start Loan Program on Tuesday afternoon at a news conference. It’s a more affordable alternative to traditional payday loans that it hopes will provide much-needed relief to people struggling in the payday loan debt cycle. The City of Springfield and its Impacting Poverty Commission support the effort.

“There are many people in Greene and Christian Counties who are drowning in debt, and they turn to other costly solutions to solve short-term liquidity problems,” said CU Community Credit Union President and CEO Judy Hadsall. “Our hope is that we can help fill in the gaps where other financial products haven’t been able to provide assistance and create a lasting impact for people’s financial well-being.”

The U.S. Treasury recently awarded $1,988,750 in grant dollars to CU Community Credit, which the credit union plans to use to roll out the new loan program. CU Community is certified by the U.S. Treasury Department as a Community Development Financial Institution (CDFI) – a specialized financial institution that works in underserved markets.

The need for credit building and debt consolidation to reduce the burden of poverty is greater in Springfield than almost anywhere in the state. Approximately 26 percent of Springfieldians live at or below the federal poverty level. Many work two jobs to try to make ends meet. Despite relatively low unemployment rates, the Federal Reserve designated the community as in “severe fiscal distress” due to the high incidence of poverty.

The Missouri Division of Finance says nearly 2 million payday loans were issued in Missouri from Oct. 2013 to Sept. 2014. The average amount of each loan was nearly $310 and the average annual percentage rate (APR) was almost 452 percent. Payday loan borrowers in Missouri can roll over their loans up to six times but additional fees accrue each time they do so.

“Our Fresh Start Loan Program provides members access to small, short-term loans with reasonable rates and fees,” Hadsall said. “Our financial specialists will work with members to determine if this product is the right fit for their situation and to help them consolidate their existing payday loans so that they get out of the debt cycle faster.”

CU Community Credit Union plans to launch the following loan products in 2016:

  • Payday Loan Alternative
  • Credit Builder Loan
  • Payday Consolidation Loan
  • Title Loan Alternative

The Fresh Start Loan Program will give people in Greene and Christian counties the opportunity to build and repair credit, break the payday lending cycle, and consolidate their existing payday loans or other short-term loans that have high interest rates.

Participants can enter the program with no credit check, and CU Community Credit Union will provide access to mainstream banking services such as checking accounts with debit cards, online and mobile banking, and a network of nearly 30,000 free ATMs nationwide.

To help get the word out about Fresh Start Loan Program to those who may qualify, CU Community Credit Union has teamed up with the City of Springfield and several local non-profits, including Community Foundation of the Ozarks, Community Partnership of the Ozarks, Consumer Credit Counseling Services, Council of Churches of the Ozarks, Faith Voices for Southwest Missouri and the Ozarks Area Community Action Foundation.”

Read more at: KSPR

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“The CU Community Credit Union has announced the roll out of an assistance program intended to help those who may fall victim to high interest, short-term loans.

Springfield City Manager Greg Burris, who also co-chairs the Impacting Poverty Commission, says these so-called payday loans can come at a high cost to Missourians.

“Department of Finance for the state of Missouri recently did a study of the payday loan interest rates, the annual interest rates that are charged in Missouri, the average is 451 percent,” he says.

This is especially impactful in Springfield, where Burris says approximately 26 percent of residents are living at or below the federal poverty level. These individuals may have few monetary options and can be prime targets for payday loans.

Missouri House Representative Kevin Austin of Springfield, who joined Burris during a Tuesday press conference, says the Fresh Start Loan Program may give these individuals an alternative path.

“I know in the legislature we have had bills proposed and debated about payday loans and payday lenders, quality bills, but some people will argue on behalf of this 26 percent ‘well there is no other place for them to go.’ Well now there is somewhere else for them to go,” Austin says.

In September, CU Community Credit Union received nearly $1,988,750 in grant funding from the U.S. Treasury.  According to President and CEO Judy Hadsall, that funding will be used to roll out the Fresh Start Loan Program, which will also offer help consolidating short term loans for lower interest rates, and provide basic financial services.

“We will also help those that have blemishes on their record by allowing them to have a checking account,” Hadsall said. “You cannot imagine how many people do not even have the ability to get a checking account these days. That will give them access to other financial services we all take for granted.”

Participants will be able to enter the program without a credit check and will have access to title loan alternatives, credit building loans, and ATM services.”

Read more at: KSMU.org

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“There’s perhaps no other time of year when we are so acutely aware of how tight our budgets are. It’s easy to get caught up in the excitement and expectations of gift giving and socializing, even when there’s not enough room in the bank account to splurge.

As a result, some people go into debt during the holidays. Some turn to credit cards when they’re short on cash, even though going into credit card debt can be expensive and have an unintended and unwanted impact on your credit. Though credit card debt has negative consequences, there are worse holiday-debt scenarios. For people who don’t have credit cards at their disposal, it’s easy to see how a short-term, small-dollar loan might be appealing: Borrow enough to get some gifts before Christmas, and cover that loan as soon as your next paycheck comes. Payday lenders are advertising their products as a way to make the season less stressful, but many researchers and consumer advocates argue payday loans are often anything but stress-free.

A 2013 series of reports from the Pew Charitable Trusts explored who borrows payday loans, why they borrow them and how they repay them. According to that research, payday loan borrowers see the products as the solution to many problems: Not only do they get cash quickly, they do it without going into long-term debt or needing to ask friends or family for money. The Pew Charitable Trusts researchers found that only 14% of payday loan borrowers can afford to repay the balance when it comes due, generally about two weeks after it was first borrowed. To pay off the loan, 41% needed an infusion of cash, like pawning a personal possession, getting a tax refund or asking a friend or family for help — options that are generally available before the person takes out the payday loan.

The typical payday loan hardly resembles a quick fix. The average borrower is in debt for 212 days, according to the Center for Responsible Lending, bringing the cost of $325 loan to about $793 by the time the borrower pays it off.

At the same time, a majority of payday loan borrowers say the loans provide relief, which conflicts with the frustration they feel when trying to repay them, according to the Pew Charitable Trusts. For people constantly struggling to make ends meet (58% of payday loan borrowers, the Pew report says), it’s understandable that the pressure of the holidays may increase the appeal of short-term loans. However, using a payday loan to relieve that stress seems more likely to drag out into a long-term, expensive problem.”

Read more at: Credit.com

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“A friend of mine from Chile has a mentally incapacitated son. Because of her circumstances, she needed to send this son back to Chile to be with an uncle. She didn’t have funds for air passage and borrowed from a friend. Even though the son was clearly identified to the airline as needing help boarding and exiting planes and handling layovers, the airline people in Mexico failed to get him aboard the proper airline to Chile. He was stranded in Mexico for two days while my friend, desperate for funds to purchase a new ticket because the airline refused to own the problem, went to a payday loan center in Spanish Fork. They advertised loans of 30 percent interest and she was desperate and out of other resources.

My friend does not speak and understand English too well, but not having other resources felt she could afford the high interest rate, as she didn’t have collateral. She completed the application for the loan, being rushed because of her son still stuck in an airport in Mexico. She didn’t pay too much attention to the details of the loan and was not fully capable of understanding the details anyway. The payday loan center had a Spanish-speaking person who was friendly and that gave her assurance that she was being treated fairly.

However, here are the facts of the loan which we discovered. The payday loan center charged her a number of other small fees including an $85 document preparation fee [for two pages of documentation]. The actual stated interest on the loan was actually written at 106 percent interest, not the 30 percent advertised, which was never made clear to her. She informed me that she was paying 30 percent interest when I asked. In addition the interest was calculated using a one-year pay back, but the agreement called for her to pay the full loan plus interest in equal installments over only nine months. What that means is that she had to pay the full amount of interest for a one-year loan plus interest in just nine months.

The true interest including the document preparation fee for my friend’s loan turns out to be 235.75 percent. This makes me ask a couple of questions? How do we as a society justify letting people get treated this way? How can people who deal in usury in this manner manage to operate as legitimate businesses in a so-called civilized society?

On the one hand you have banks who will only lend on collateral and/or high credit ratings for personal loans. Then you have high-rate credit cards that also screen out the working poor. Then nothing exists until you get to loan sharks. Are they some kind of protected class? What impediments have we placed against legitimate business loans to poor people who need funds, who will pay their loans back and who are willing to pay a premium interest rate, yet who are left to deceptive lenders charging undisclosed high interest rates and fees?”

Read more at: Deseret News

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“At its Nov. 17 meeting, the Campbell City Council voted 3-2 to add new restrictions to payday lending businesses operating in the city.

The city amended its current ordinance to address what the city says are “social and safety concerns” associated with businesses that give people payday advances. Earlier in the year the city council made payday lending issues a priority in an effort to prevent Campbell’s financially vulnerable residents from possibly entering into an endless cycle of loans.

Changes to the ordinance make it so that existing payday lenders can operate in only five parts of the city identified as general commercial away from low-income neighborhoods. Those areas are West Hamilton Avenue west of the San Tomas Expressway; East Hamilton Avenue east of South Winchester Boulevard; South Bascom Avenue north of Dry Creek Road; Camden and South Bascom avenues south of Camden Avenue; and South Winchester Boulevard south of Sunnyoaks Avenue.

There are currently four payday lending businesses in the city, each of which already operate in those five areas. According to the city staff report from the planning commission’s Oct. 27 meeting, the city’s most recent payday lending business was established in 2004. Another such business was incorporated into Campbell in a 2013 annexation.

To eliminate the possibility of another establishment entering the city beyond the current businesses, the council voted to update the ordinance to allow a maximum of three payday lenders in the city. The new ordinance does not apply to check cashing businesses.

The new ordinance also requires payday lending businesses to be located at least 500 feet from liquor stores, and to limit signage promoting the businesses to no more than 10 percent of storefront doors and windows. The decrease in signage would allow Campbell police officers a better view inside the businesses when on patrol and to limit attracting new customers, according to city staff.

Security bars on doors and windows will also be prohibited as the additions are “found to negatively impact the aesthetics of storefronts and buildings, as well as the surrounding neighborhood,” according to the staff report.

Payday loans usually have 14-day terms; the borrower provides a post-dated check for the amount of the loan plus the lender’s fees. The borrower immediately receives cash, and the check is cashed on the borrower’s next payday unless the loan is paid back. Under state law, $300 is the maximum loan amount with a maximum fee of 15 percent of the loan for a maximum of 31 days. The fees work out to a higher interest rate than most credit cards, according to city staff.

Six speakers from consumer advocacy groups voiced their support for placing restrictions on both payday lending and check cashing businesses at the Nov. 17 meeting.

Melissa Morris, a senior attorney for the Law Foundation of Silicon Valley, sent a letter to the city explaining how the businesses keep borrowers in a cycle of debt.

“The average payday loan borrower takes out eight loans per year, often renewing an existing loan or taking out a new loan within days of repaying the previous one,” Morris’ letter stated.

Wendy Ho, a representative from United Way Silicon Valley, said at the meeting that there is one payday lender or check cash business for every 7,500 Campbell residents. Campbell’s population is just over 40,000.”

Read more at: Mercury News


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“Sky News has learnt that Wonga will this week begin testing a 90-day loan which allows customers greater flexibility to spread repayments over a longer period.

The product, which will be piloted for several months, is the first extension of the Wonga brand to be unveiled since the company announced in April that it had made a loss of more than £37m last year.

A source said on Wednesday that Wonga would initially limit the availability of the new loans in order to “deliver positive outcomes”, adding that only existing customers would be able to apply for them during the trial period.

Customers who take out one of the longer-term loans will do so on the same terms as the existing product, paying interest of 0.8% – or 80p per £100 borrowed – per day.

Strict limits introduced by the City regulator, the Financial Conduct Authority (FCA) have imposed a cap on the amount that payday lenders can charge in interest.

A Wonga spokesman said: “We can confirm that we are planning to launch a pilot of a more flexible, three-month instalment loan to existing customers this week.”

Wonga, which has become the target of sustained criticism by opponents of the short-term lending sector, is going through a process of authorisation by the FCA, having been operating under interim licences since last year.

The regulator has estimated that the vast majority of the roughly 400 payday lenders operating in Britain will go out of business following the introduction in January of a price cap on loan and repayment charges.

Analysts have expressed scepticism that Wonga’s new management team will be able to resuscitate its brand in the wake of a series of reputation-battering scandals.

Last year, it was forced by the FCA to pay more than £2.5m in compensation to 45,000 customers who were sent letters purporting to be from law firms but which in fact did not exist.

A near-£20m charge to cover the cost of compensation, as well as legal and administrative costs related to the issue, was taken in its annual results for 2014.

More recently, Wonga has announced plans to halve its UK workforce with the loss of 325 jobs.

Explaining the cull, Andy Haste, Wonga’s chairman, said: “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes.”

Read more at: Sky News

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“On Thanksgiving Day, a new 50,000-square foot pawn shop will open in Sioux Falls, South Dakota, with an indoor shooting range, a concert stage, a deli, and branded merchandise (think: t-shirts, hot sauce, motorcycles, and more) as far as the eye can see.

Owner Chuck Brennan is calling it the “Disneyland of pawn shops.”

Visitors walking through Badlands Pawn, Gold & Jewelry can peer at an on-site foundry melting down gold and silver, a display case with $1 million in gold bricks, a live rock radio studio, a 410 Sprint racecar, a saloon with video lottery games, and 300 guitars “flying through the air” on a custom guitar rig. In addition to the typical pawn shop wares, says Brennan, Badlands will also be home to a TV game show that will air on local Fox affiliates, and visitors can test out and buy everything from handguns to fully automatic assault rifles in the shop’s 14-lane shooting gallery and gun shop. Musical acts booked for the concert hall include Joan Jett, KISS, Europe, Rick Springfield, and The Offspring.

Plus, anyone of legal age can pop into an on-site parlor for a free tattoo—of the Badlands logo, of course.

Part of an effort to enliven the city’s downtown, the construction of Badlands comes as pawn shops across the country are trying to go mainstream. With record growth in the years following the recession—as unemployment and metal prices rose alongside the popularity of shows like “Hardcore Pawn” and “Pawn Stars”—the pawn shop industry has been working hard to shed its bad reputation.

But just as Badlands is more than a pawn shop, Brennan is more than just a pawn shop owner. He’s the Las Vegas-based multimillionaire founder of Dollar Loan Center, a payday lender with more than 80 locations in California, Nevada, Utah, and his home state of South Dakota.

As it turns out, pawn shops and payday lenders have something important in common in South Dakota: They are unregulated by the government and can charge borrowers any interest rate they’d like.

Consequently, South Dakota has among the highest concentration of payday lenders per capita and the highest payday loan rates in the country (an average of 574% annually). On average, payday borrowers who borrow $300 in South Dakota will owe back more than $900 after only 5 months.

Critics of Brennan and the industries he represents say a lack of regulation traps borrowers in cycles of debt. While pawn shop loans tend to be paid off relatively quickly—in part because borrowers are eager to get back items with sentimental value—four out of five payday loans in the U.S. are rolled over or renewed within 14 days. That means rates billed as “short-term” can be deceptive: The median payday customer is in debt for nearly 200 days a year.

Leaders of a group called South Dakotans for Responsible Lending say they have collected more than 20,000 signatures in favor of a ballot measure to cap interest rates of payday lenders at 36% annually, qualifying the proposed law for the November 2016 state ballot. (That 36% cap mirrors federal rules limiting interest on loans to military servicemembers).

While the proposed cap has gained the support of other consumer advocates, including the AARP, Badlands’ Brennan is—unsurprisingly—opposed.

“I believe those rates should be set by the market,” he says. “A cap could put us out of business. A lot of people can’t use banks, and they need these services.”

Read more at: Time

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In September, the Ferguson Commission issued a report shedding light on the vast economic, racial, and social disparities within the St. Louis region. While many of the problems raised in the report will take years to address, one problem identified by the report is one that Missouri leaders could take on now: predatory lending practices.

The report notes, “While low wages make it difficult to escape poverty, predatory lending often makes poverty worse.” With a state minimum wage of only $7.65 per hour — below the federal poverty line for anyone with children — many cash-strapped Missourians turn to payday lenders when they have too much month for the money. And they often end up in a deeper hole as a result.

In Missouri, the average annual interest rate on a payday loan is 444 percent, nearly 30 times higher than a typical credit card rate. Not surprisingly, nearly half of all borrowers eventually default on these loans. One St. Louis-area borrower, Naya Burks, saw her $1,000 loan — unaffordable from the start, at 240 percent interest — turn into a $40,000 debt as her lender applied penalty fees and ultimately attempted to sue.

Yet at almost every turn, rather than standing up for struggling families, Missouri politicians have sided with an industry that profits from working families’ financial vulnerabilities. It’s time to take predatory lending seriously, and to hold politicians accountable for the distress these lenders bring to communities across the state.

Traveling across Missouri, you’re as likely to stumble on a payday lender — there are about 900 — as one of the roughly 1,000 grocery stores in the state. These high-cost products are illegal in 14 states and the District of Columbia, where the annual interest rate is capped at 36 percent or less. And they’re also illegal to sell to our troops and their families, thanks to a 2006 federal law that set a 36 percent cap — a measure co-sponsored by Sen. Jim Talent, R-Missouri.

In recent years, Missourians haven’t been so lucky. The closest the Legislature has come to taking up the issue came last year, when it passed a bill that claimed to reform the industry but wouldn’t really change anything. When the issue has gone to the ballot in other states — such as Ohio, Arizona and Montana — voters overwhelmingly choose to end predatory lending. Unfortunately, a similar attempt in Missouri in 2012 didn’t even make it onto the ballot, faced with legal challenges and a rival industry-led campaign using similar language to support the status quo.

In the meantime, communities of color are the ones who lose the most from predatory loans. In particular, African-Americans are two times more likely to take out a payday loan relative to other groups. It’s not surprising given financial stress: Half of African-Americans nationwide reported in a 2012 survey that they would have trouble coming up with $2,000 in short notice. Getting knocked down with a loan that leaves borrowers worse off than before — with what is often thousands of dollars in interest and fees — leads to a wider racial wealth gap. In 2013, the median white family had 13 times the wealth of the median African-American family, the widest this gap has been since 1989.”

Read more at: St. Louis Post