Think your relatively poor or ordinary congregation can’t make a difference? Think again.
Meet the congregation of Jeff Street Baptist in Louisville, Ky., featured in the January 2013 magazine article “Multiplying Loaves,” by Beth Newberry. Not only has this modest church raised $180,000 to provide micro loans to people around the world, but members are also lobbying for payday lending reform nationwide and taking on the payday lenders in their local community.
According to the Center for Responsible Lending (CRL), from California to North Carolina payday lenders disproportionately target and exploit African-American and Latino communities. Through loans with interest rates of more than 400 percent, payday lenders often trap borrowers in a cycle of debt.
Payday lenders claim their loans are short-term and for emergency use, but most borrowers cannot afford to pay back their loan plus the charges when the high-interest loan becomes due in two weeks. Borrowers then end up taking out repeated loans, paying an additional fee each time.
To put that in perspective, at the end of eight back-to-back loans, a typical $325 loan would have accumulated $468 in interest, according to a CRL study. The borrower would have to pay $793 to retire their $325 payday loan.
To counter these predatory practices, Jeff Street Baptist members Susan Taylor and Andy Loving created the Louisville Loan Club, which opens in early 2013 and will provide borrowers with socially responsible loans. The company offers reasonable interest rates and will teach participants how to develop good credit and savings. Read more about the Louisville Loan Club in “Loan Stars.”
Jeff Street Baptist is just one of many faith communities squaring off against the payday lending industry. Various religious groups and leaders around the country continue to confront payday lenders that prey on the poor and communities of color.
According to Rev. DeForest B. Soaries Jr., a former New Jersey secretary of state and staunch advocate of payday lending reform, “Payday loans are as sinister a presence in low-income communities today as the Jim Crow practices were in black communities in the mid-20th century. I am as committed to protesting the allowance of predatory lending as my forebears were committed to fighting against segregation.”
In early 2013, religious groups nationwide can take part in a day of action—organized by Rev. Soaries Jr. and supported by CRL—to stop payday lending. Their goal is to mobilize and equip thousands of people of faith to raise awareness about and take action against predatory lending in local communities. To participate in the National Day of Action to Stop Predatory Lending, sign up here.
Check out CRL’s Faith and Credit program for more faith-based resources—including church discussion guides, statements, and materials—to end payday lending.
Elaina Ramsey is assistant editor of Sojourners.
Image: Neon 'payday loans' sign, mikeledray / Shutterstock.com