WAUSAU, Wis. (WSAU) — Faith leaders and community experts came together for an informational panel on payday lending Wednesday night in Wausau.
The North Central Area Congregations Organized To Make An Impact (NAOMI) and the Wisconsin Public Interest Research Group (WISPIRG) hosted the event ahead of an announcement from the Consumer Financial Protection Bureau regarding payday lending and its potential predatory nature. WISPIRG Director Peter Skopec hopes that the announcement will be good news for those seeking more regulations on the loans.
Skopec said, “The biggest thing that we are hoping to see in the rule… is that payday lenders will be required to do everything that responsible lenders do as well by checking a potential borrower’s ability to repay the loan before they take it out.”
Credit reports aren’t pulled with many payday loans, leaving individuals with a high amount of debt already vulnerable to more irresponsible debt. Shirley Hubert is a Financial Advocate from Catholic Charities. Her experiences with managing finances include many who have allowed the payday loan to drag the rest of their finances down because of interest payments.
Hubert said, “They may have a lot of debt, but for some reason they still need this payday loan so now they’re going to actually hurt themselves more with credit scores and so-forth… they’ve escalated their financial situation quite fast.”]
Jenelle Thompson has worked as a personal banking officer locally for over 20 years. Thompson defines payday loans as predatory because of their high interest rates and their payment structures designed to collect more interest and less on the principal of the loan. She finds many customers take payday loans to help pay other debts, but she says that’s the beginning of an even more vicious cycle.
“A lot of places will help you make payment arrangements on your existing debt if they know you’re having a problem, but if you don’t call and talk to them, they cannot help you out. Even if it’s medical, a lot of the medical facilities have payment arrangements. They have special loans that they can do internally that is at an extremely good rate, that you don’t have to set yourself up for these cycles of failure,” said Thompson.
The President of NAOMI, Ron Alexander, was an adjunct instructor at Northcentral Technical College and shared several stories of people he’s seen affected deeply by payday loans, including a single mother of two whose life took a turn when she borrowed money to fix her vehicle.
Alexander said, “You could just tell that she was under more stress than usual. Her grades started to reflect that stress and as far as I know, during that whole semester, she never was able to pay any more than the interest payment. An A student became a C student.”
A public comment period on the new rule will go on for 60 to 90 days, and Skopec says that the support of the public will be key to keep the payday loan vendors from leveraging any loopholes in the new regulations.
Skopec said, “It’s going to be really crucial for the public to weigh in on this issue and let the Consumer Financial Protection Bureau know that there is public support for a strong payday lending rule that will protect consumers and do the right thing by consumers.”
A podcast of the discussion is up now as a Newsmakers Interview podcast.
