SPRINGFIELD, Mo. – A group of Springfield pastors and faith leaders protested against the payday lending industry Tuesday.
The Faith Voices of Southwest Missouri group is pushing politicians for solutions and is trying to come up with its own solutions for people in the community struggling financially.
Payday loans are a way to get quick cash for in a crunch, but carry high interest rates.
The faith voices group told the personal story Tuesday of Jennifer Trogdon.
Trogdon took out a $475 loan with 449% interest for an emergency car repair, and ended up paying back $3,000 in interest as she continued to roll over the loan.
Faith Voices of Southwest Missouri has been working with local credit unions and churches to pool together money to make low-interest loans to people in need.
“Part of doing something about it is naming the evil, naming the trap which predatory lending is,” said Susan Schmalzbauer. “And the other thing is getting rid of the shame, because those two things come together and the shame keeps people quiet.”
CU Community Credit Union in 2015 was able to get a $2 million grant from the U.S. Treasury Department to provide short term loans to borrowers. The credit union can make $500 loans at 25-35% interest and these loans have a longer payoff than the 30 days customers typically have to pay back a payday loan.
The leaders of faith voices also want Missouri lawmakers to cap interest at 36 percent and want the consumer financial protection bureau to finalize strong federal regulations.
“You look at Missouri now and Missouri now with more payday loans than there are Starbucks and McDonalds and Wal-Mart’s combined, you know, it didn’t get that way by accident,” Schmalzbauer said.
Faith Voices of Southwest Missouri is going to begin asking Missouri lawmakers to sign a commitment letter to support a 36 percent interest cap and to refuse campaign contributions from payday lenders.
The Consumer Financial Protection Bureau is expected to release new federal payday loan regulations later this spring.
Those regulations will require payday lenders to do more to check if a customer can pay back a loan.