The Worship Center Christian Church announced during church services in Birmingham, Alabama that it will be paying off the debts of 48 people who applied for online payday loans and are still struggling to pay them off. The church, which regularly sees 3,000 people in its Bessemer and Birmingham locations, said that the loans, slated to be paid off, amount to over $40,000. Interest rates on the short-term unsecured debt is 36% and higher.
Senior Pastor Van Moody described the financing as a “. . . kind ticking time bomb with high interest rates.”
He added that is why many people never get out from under the debt. Payday financing is defined as an unsecured cash advance that people acquire in order to pay an expense that cannot wait. For example, if anyone who needs his car repaired and also needs to get to work will often seek payday financing to help him pay the bill.
However, some people fall prey to the loans to pay for an unnecessary expense, such as new clothes or a weekend vacation. The loans are easy to get as the loan applicant only needs to have a job, be at least 18 years old and have a checking account. Because the loan is not secured or collateralized and the applicant does not need perfect credit, the financing rate is normally exorbitant.
According to the church, the people who are getting their loans paid will be required to attend financial workshops and schedule financial counseling so they are not tempted to take out the same type of loan and get into trouble again. Vanessa Davis, who is the CFO of the Worship Center commented on the church’s efforts to help the borrowers. She said, “We’re doing workshops, helping with budgeting – [e]verything they need to get a fresh start.”
The idea for paying off the financing came after two February sermons where Reverend Moody discussed the topic of getting out of debt. In one of the sermons, the preacher donned prison attire to show that being in debt could be equated to being in jail. After the service, the preacher asked that the people in attendance fill out questionnaires about the debts they owed. Because some of the respondents were visitors, the church is paying off the short-term loans of parishioners and non-members alike.