at helping hands, advocacy means speaking out with, and sometimes for, our neighbors experiencing the effects of poverty.
Payday and Auto Title Loans
Payday and auto title loans have devastating effects for low and middle-income Texans. The payday and auto title lending industry’s business model is based on trapping our most vulnerable neighbors who typically have very few financial resources available to them – including the elderly, disabled, veterans, and working poor – in a cycle of debt.
As an organization, Helping Hands Ministry became concerned with payday and auto title loans several years ago when it became evident that many clients who requested financial assistance for rent, utilities, or prescriptions were indebted to payday or auto title lenders. Numerous families have shared their stories of loan entrapment with Helping Hands staff, including the Stone* family, who came to Helping Hands for assistance with a loan payment. Mr. Stone is a husband, father of 2, and disabled veteran who is unable to work and relies on disability benefits as his primary source of income. When the Stones came up short on rent, they took out an auto title loan in the amount of $2,500 on their only vehicle. After making rollover payments for 10 months, the Stones had paid $3,500 in fees, yet still owed the entire $2,500 principal. (Payments to payday and auto title lenders do not pay down the principal amount of the loan at all; borrowers have to repay the principal in a lump sum.) Mr. and Mrs. Stone came to Helping Hands because they knew if they missed the payment, their car would be repossessed, leaving them without any transportation. This would mean Mrs. Stone would no longer have transportation to work and would likely lose her job, Mr. Stone would miss medical appointments at the VA, and the family would have no access to a grocery store (the closest store was 4 miles away).
Helping Hands supports regulation of the payday and auto title lending industry, not only on economic and social grounds, but also on the beliefs they hold as professing Christians. Scripture is clear in its exhortation to deal justly and generously with the poor, to avoid exacting interest, and to speak up for those who are oppressed.
To learn more about how citizens can speak out on behalf of the poor against the payday and auto title loan industry, visit these websites:
Texas Fair Lending Alliance: http://www.texasfairlending.org/
Texas Appleseed: https://www.texasappleseed.org/payday-auto-title-lending-reform
Consumer Financial Protection Bureau: https://www.consumerfinance.gov/ask-cfpb/category-payday-loans/
*The family’s name has been changed to respect their privacy.