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Catholic Church Sets Their Sights on Payday Loans

Catholic ChurchAccording to a March 9, 2016 article in the Lubbock Avalanche-Journal, the Catholic Church has gotten on the band wagon against auto title and payday loan lenders. Jennifer Allmon, who works for the Catholic Conference in Texas as Associate Director, made the following comment about servers that off the best payday loans. She said, “The current lending environment is like the Wild, Wild West – no limits.” She added, “. . . [A] $500 loan becomes a $3,000 repayment process.” She said that payday borrowers are typically hard workers who wish to repay their debts. However, the current system is “stacked against them.”

Allmon described her efforts at a recent forum in changing the current laws and educating people about payday loan and title lending tactics and practices. She said that often “[t]he collection practices [can be] extremely aggressive. According to the news report, payday loan companies and vehicle title firms collected almost $9 million in charges in 2016 and repossessed, on average, 10 cars or trucks weekly.

The high interest on payday loans and title loans, along with the fees, can turn a $500 loan payment into one that is five times the original amount. A St. Joseph Catholic staff member in Lubbock commented on the high amount of interest that is tacked onto the loan amounts. Dora Rendon said, “It’s hard when you have a family and . . . have to pay bills, but there shouldn’t be that kind of interest. There’s got to be some [other option].”

Allmon said that payday lenders are not only operating inequitably, there is also proof that they are not being fair in their dealings. For example, one of the payday lenders, Cash America, is being fined for fraudulent practices. According to Allmon, a number of attempts toward reform have not succeeded in the Texas legislature. However, Brett Merfish, a representative for the advocacy group, Texas Appleseed, did say that some laws have been adopted locally. He said that some cities [in Texas] were more proactive in making payday lending improvements.

The bishop at the Catholic Diocese in Lubbock says he supports payday lending and auto title reform. He made the following statement, “I think we’re going the right way. . . . [T]here’s so much to be done in this area.” Suggestions have been made in the Church about educating families on home budgeting. If families know how to better plan their spending and maintain a good credit standing, they won’t have to resort as often to payday type financing.

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