For the past couple of years, the payday loan industry has come under heavy scrutiny. Everywhere from California to Maine, officials and citizens are demanding action taken against this sector. Critics say the industry preys on the impecunious and places them in a vicious cycle of debt. Proponents argue, however, that it’s a service the most vulnerable needs.
The general consensus, though, is that a lot of people aren’t exactly advocates of these short-term, high interest loans. Simply put: community leaders want an alternative to these payday loans, or at least different approaches. Now, they’re working on these other options.
The Rise of the ‘JIFFI Boys’
Indiana residents have noticed an alternative to the conventional payday loan store pop up. Known as the Jubilee Initiative for Financial Inclusion (JIFFI), a non-profit initiated in 2013 by a Notre Dame finance student, is helping a plethora of consumers in desperate need.
Referred to as the “JIFFI boys,” this organization provides cash loans for bad credit with flexible payment solutions and low interest rates. In addition to these loans, the group offers financial literacy education. The money it lends out primarily comes from donations and grants, though it still charges interest on loans it hands out – the rates are far lower than industry stalwarts.
JIFFI has plans to expand its organization and take on new clients.
BCL Takes Over Texas
Over in Texas, community leaders are irked by costly payday loans as well as title loans. Business and Community Lenders of Texas, or BCL, has launched several centers across the Lone Star State. It’s now looking to break even as demand soars. But why is it working out so well?
The group promotes small-dollar loans that include maximum fees and interest of just $96. Each loan consists of a 12-month term, a $20 application fee, a cap of $1,000 and an interest rate of 18 percent. Like JIFFI, these are an improvement in terms compared to more established stores.
Although it may seem like sunshine and lollipops, the company’s founders realized that razor-thin profit margins come with the territory. To circumvent this, they’ve decided to partner with employers and have plans to go nationwide. Will it work? Only time will tell.
But as some want to compete with payday loan stores with friendlier terms and several more consumer-friendly options, others desire to inform, educate and instruct.
Inform, Educated, Instruct, Repeat
Abraham Hamilton III, attorney and public policy analyst for the American Family Association, tells One News Now that a recent poll of Christians suggests that most people are in agreement that payday loans are bad for everyone. However, instead of providing alternatives, he wants to inform the people that these types of unscrupulous payday loan practices are out there. Moreover, he wants to educate people on financial management and instruct them on the best types of financial literacy initiatives out there.
With that being said, Hamilton also wants to amplify citizens-based efforts at the government level to rein in payday loan stores. Without accomplishing this, Hamilton says, nothing will be done to help the poor and victims of widespread payday loan abuses.
“I’m not one to necessarily say, ‘Hey, you guys can’t do business,’ but I do think a lot of these things should be illegal, and I think it should be something that follows an outcry from the community, as opposed to it being like a top down type of squelching process,” Hamilton said.
This comes as many states are looking to restrict payday loan use, senators regulating online payday lending and the Consumer Financial Protection Bureau clamping down on payday loan businesses.