Payday loans are regarded as predatory and oppressive . . .

Among University Heights Baptist Church’s core values, “compassion for hurting people that is expressed in action, not just words.”

Our church could do something to make a difference for at least a few people.”

A

Church Offers Alternative TO PAYDAY LOANS

Baptist church in the state of Missouri in the United States has developed a program to assist persons who are trapped by high interest payday loans.

University Heights Baptist Church (UHBC) in the city of Springfield

has, among its core values, “compassion for hurting people that is expressed in action, not just words.” Payday loans

are regarded as predatory and oppressive due to

unreasonable and excessive rates of interest and penalties that are imposed on borrowers, the majority of whom are low income persons. The practice, which has grown rapidly through parts of the US and in other countries, carries substantial risks to borrowers, most of whom are already financially vulnerable.

Through its University Hope Ministry, loans are provided by UHBC

to affected persons “to pay off a predatory loan.” The amount loaned is secured by funds made available by the UHBC Deacon’s Benevolent Fund and gifts by individual members of the church. Participating members may “open a $1,000 CD (certificate of deposit) at current rates (two-year or longer term) to secure the loans,” said Bob Perry, who coordinates the program. Loans will be made through a partnership with the Educational Community Credit Union, which handles the collection of payments. “Each loan recipient will be provided with budget counseling and ongoing support and encouragement from University Hope volunteers,” Perry stated.

“The credit union will make ‘shared-secured’ loans to people we recommend at a very favorable rate of interest,” Perry elaborated. “This will allow them to escape from the unfair trap of predatory loans.” Perry estimates that loans may “probably [be] less

than six percent. This contrasts with the 25 percent to 400 percent charged by payday loan businesses.” UHBC’s program is in response to the rapid growth in payday loan operations in sections of the US since 2008, where it is legal in 27 states and allowed on a more limited basis in nine others. Attempts to regulate the industry and curb the more predatory practices have been met by fierce lobbying by payday companies, which pay millions of dollars to prevent, stifle or water down such regulations in the US Congress and in state houses. A report from the Federal Reserve Bank of

New York notes that “payday loans are extremely expensive, and borrowers who take a payday loan are at a disadvantage in comparison to the lender.” “We decided to focus our efforts on the working poor and felt we could do something proactive about payday loans,” Perry told the Springfield News-Leader newspaper. “We felt our church could do something to make a difference for at least a few people.”

JANUARY/MARCH 2016 9