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WWL>Topics>>3-20 2:10pm Angela, payday loans

3-20 2:10pm Angela, payday loans

Mar 20, 2014|

People in desperate need…they may be your family members, co-workers, church members…are making payday loans with interest rates as high as 700%! Louisiana has “loansharking laws” that make it a felony to lend at interest rates above 45%, a crime punishable by fines of $10,000 or 1 to 5 years in jail. BUT, payday lenders are exempt. Why? What’s the loophole? And, how do we close it? There are bills proposed in this legislative session to limit the annual interest rate of payday lenders to 36%. Still enormously high…still painful for people in a crisis who need immediate financial help…but will it happen? We spoke to Diane Hanley with Together Louisiana, Reverend Errol Domingue, pastor of Elm Grove Baptist Church who hosted the statewide assembly for payday lending reform, and State Senator Ben Nevers.

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Automatically Generated Transcript (may not be 100% accurate)

We -- talking our second hour in this blew my mind. And I think it will others as well and something needs to be done. Many of us have found hit a rough financial patch and may have needed a quick Cologne and that's not the traditional go to the bank and get a loan. But something that can get us over a -- There are places you can go but it cost -- mightily. What would you say to -- interest rates have 50%. Or a 100%. Or even higher. It's incredible to think about that but a very real in some people's lives. They are called payday loans and they are perfectly legal in Louisiana. Today we have representatives of a group who is fighting the unlimited amount of interest that can be charged by these payday lenders. It's called together Louisiana. And it held a rally in Baton Rouge on Tuesday where over 600. People. Gathered in a church to talk about the problem and the solution. Joining us is Diane handling of together Louisiana. And the reverend reverend Errol domain pastor of elm grove Baptist Church in Baton Rouge who hosted the meeting this week. And have by phone state senator Ben Evers who was sponsoring a bill in the session of the legislature and I thank each and every one of you for joining us. Again took to try to simplify something that is. When I first looked at what how can anybody charged 400%. Where where does this come from so let's say I. I'm a little short and I need a thousand dollars so I go to a payday loan place and they would charge me 50% let's go low. That means in my 1000 dollar loan would -- 15100. That's right that's how does it get even higher and higher. Well when you go in and you take out a loan. It's usually alone for two weeks -- month you have to pay it back that quickly because it's based on your paycheck. So when your paycheck comes back in. Then the loan is dated. And so they may charge may be sixteen point 75%. On -- two week. But if we compare that -- annual percentage rate which is how other loans are figured out. And use and you multiply that out times 26 week. Then you're talking about huge amount of interest rates -- talking about almost 400 dollars in interest plus. -- fees that are attached to that. If a person doesn't have 800 dollars in their budget. When on they take out the -- within two weeks the likelihood that there are gonna have 800 isn't very very low so. That's the industry's. Understanding they're not gonna be OT the plane in the business model is to get them backing yen. Have they not be able to pay it back so that they have to take out another loan so over the course of a year at the interest rate. Builds so much exponentially. It might have started out small for a two week round but it's gonna grow every time they cannot pay it back within two weeks or a month. A reverend you have a vote in your congregation and other people's congregations that suffer tennis. Exactly I was really shocked when we begin to talk about this publicly and people came forward. Telling their stories and it just really blew my mind that. While we have in church on Sunday I actually had a lady that since he was considering suicide. Because he was caught in this trap and it seemed like there was no win. The there are laws in Louisiana. That the correct me if I'm wrong that say Nolan can charge over 45%. But they've been excluded the payday loan. How did that happen. Well they weren't listening to the people of Louisiana that were hurting they obviously we're listening to someone else that told them that that was a good idea. Yes that there are on laws that are usery laws that capped the amount of interest rate that you can charge. Om and that ball is passed bomb. So that it would exempt them there also. Laws that are foreign loan sharking that's your 45%. In this state if you charge more than 45% interest rates. You'll go to prison between one and five years and you will be -- take 101000 dollar fine if you're cart charging more than 45%. But they've been written out of those on the payday industry has been written out of that law as well the user laws and the loan sharking and it's now. Again you're saying you may go win and there's a 16% interest rate for the two weeks. -- is that they're out what we're not charging. 400% well actually we've found on the paperwork that people signed. They have to say on there what is the annual percentage rate and one there will be written. That the annual percentage rate is these astronomical numbers. So for example if someone to -- -- for 300 dollars before it's over. They could pay up to 850. The average number of loans that people take out. Is nine. Zone if you multiply nine times that 16% plus the fees plus the accrued interest. Then someone taking out a loan of about 300 dollars can end up paying 850 dollars in a year for that not counting the 300. That they also have to pay back that's 280%. Interest in fees and interest. Has this been going on for years and years. Why are we just hearing about Louisiana legislator passed legislature passed a law in 1999. It's called the Louisiana. Deferred resentment and small loan act. Exempting payday lenders from the usery loss that was in 1999. You are finding reverend that town people anybody can get into a desperate situation Dominican and you think well it's not made but it could be -- Where you just hit him. A rough bumping you needed something. Of course so we started looking at this predatory lending situation a couple of years ago and you know the more we -- that it is is not just. People who are lazy and don't want to work these every day. People who work hard. Who just running into a situation that. That they're desperate to try to get help and just end up in this trap. It's an unending cycle. And not everybody has family that can help them at a tough time. Well we're listening to the story is what we found is you know this is kind of the sense of embarrassment. And you know when families trying to of course they try to help. But usually the trap is already set and it's the situation is much worse then when it started. So eventually they have to go to someone to get help to get out of it because it's such a terrible cycle that they get stuck and if they would have -- originally to the person that they eventually -- to. It would not have been as desperate a situation. So they could have asked to borrow 300 dollars we've heard more families talents. That if they would have just common asked for the 500 we would -- help the mountain power helping them out of 15100. Yeah. We are joined by a -- handling and the reverend Errol domain. Both of whom are part of to get the Louisiana they are trying to fight this. They had a very large rally it's over 600 people at the reference church in Baton Rouge on Tuesday. And there was senator Ben numbers and senator numbers the reverend just -- he shot the park he was so -- to. Unbelievable tell me what to you saw in that church and out what you said. And tell us so far to call -- about working class people and the congregation. And it's thing does so yeah you know many of them had been caught in a crap. And this payday lending. Process. And let me say that you know senate daylight before not designed. Not a out to -- -- good payday loans in the medium of sore and they serve a purpose so. Quick -- for people that are in unity. But the rapid Brazilians for people -- low income level. And smoked and it won't off of people making. Between fifteen valve that 30000 dollars so low and moderate income level. And they content and a prediction -- They go -- they're graded very nicely there. They're based in cottage and and to try and type war that would allow actual concentration to be pretty. And Big -- an example. Some of the -- -- -- and Georgia a twenty dollar -- from the model workshop won't ideas or pointed our our -- in the correct. -- -- and took out at 300 dollar loan and restricted dollar fee attached to a close. Sixteen points and opposite an interest. And it could default on that on remotely loaned out for two weeks. If you default on my own you've played 36%. Interest on a two week -- And not what happened does. They're able to. Possibly. Get the people that -- might go home to -- like a kite and gold medal. Then today counsel at home and you're into a new home for the battle. And it goes only known -- -- an -- occurred earlier on many people pick up and won't per year range normal. And of course and continued compounding interest rates and the Andy he's ordered charge you you're you're talking about all -- amount of money. And shortly. You know the one thing that I can actually about congress that the they did a very hot actually back in 2007. When they say -- that. You know payday loans. Our targeting military personnel. And went to congress would -- in congress passed all of that prohibited interest rates of about 36% of shall suitability for those assigned -- for the citizens of Louisiana. Think it's a fair thing to do not think coach shortly up. All of us know that we we have people and communities is it -- in a long off quick -- And in need to pay it back but took charge hundreds of conscience interest. Awful that Jewish. Repeated. And I and I can tell you this this group that closes at one Baptist Church in Baton Rouge. Which just in tears because that means is if I can remember being taken advantage of Baja. People not always. -- studied but in an indication from not respect. And so some ability fall by it would cap interest rates featured 36%. Of AP -- And it would also prohibit people that are -- money go to Louisiana such questions. It would it would. Prohibit them from doing so mr. lots essential that we can come and their trading optical pro. Saw popular affair approach to warm I think. We should should move quickly hone in illusion. An architect he's. Apartment Xstrata prenatal and as much more acceptable to a filing bankruptcy. Then anyone else in this state. So not only they default no bones possibly get paid at -- there are defaulting up -- All the loans that they own their home and automobile. All or all of our loans or it might be necessary to pay them at a mobile. So everyone's -- that trap -- you filed bankruptcy you know they the people that you oh loss shoppers whale. So what we're trying to do this is. I guess absorbed reasonable. Amount senate. I cannot stay and protect the citizens about I just like many other states. San Fernando right now from crime if I'm wrong but. There right now there is a law that you other than the payday loans that. It can't be over 36% so what -- doing in senate bill 84 is just including the payday lenders. Doesn't that actually alone ophthalmologist. You cannot won't. You money for all of art facility interest. And and shortly. We're we're below its 36%. But surely as if the payday loan entry would put our. You know forty opposite leg and it would -- our you know that -- of the penalty is going above -- years in jail. That's something we would consider. Or who would talk about. -- but I want to tell you Angela. They're very apartment in the best lobbyist in this study. So our biggest just bill I don't know how many found on the committee that dollar surged into. Just stop this piece of legislation. And that's because. Of those talk amount of money these people making it this. And we asked some good payday loans -- are owned by a local citizens that are kind of people and in this state. But I can tell you there's many out of date and announced that he companies. They're using this to take advantage of us citizens and they're taking Mae and and possibly hundreds of millions of dollar out of Louisiana. Then bitch. There's no longer in our economic. -- longer not currently don't sort of public. What is the argument that they lobbyist or giving to keep. This. Where do they can get hundreds of -- percents of interest. Also people -- that you know we should be in the business well. Regulating the oil companies or industries. But let me play it was regulated -- lending institution. And this thing banks. Credit unions to. All the types of blending well. Facilities and then and there's no reason we shouldn't. -- some way you know the type of people from foreign minister industry. Outlets. That we announced some some good don't people who are not starting. Not and also tell you that the bit. From the testimony is an offer it -- -- you know. Part in the top polished you know. There are millions and hundreds and thousands of people and I expect that have been taken advantage. I'd like to talk to -- well I wanna get to our callers less. Hello less uptown. Okay yeah you know it -- Me -- Really yes that seem a little bit. Well life -- a reasonable number well. 36%. -- outrageous especially when you put -- on people that don't make a lot of money. You know people a lot of money Arctic alarm about an injury -- Yeah and that is absolutely correct but compare 36%. To 200%. -- Read all I understand you just and that we're talking about -- in the law. For the people that you. Of course you want to put that people should be in jail. Talked to me everybody. Well on the lobbyist will say that 36% will kill. Their business. That they can't possibly do it 36%. So I like hearing your voice and I think that you need to collier legislator and tell them that 36 -- is not even good enough but that the lobbyists will be fighting back. Hard saying that that's just a terrible number for their business. And we all know that they are going to be making money when where and other so and again I want to remind everybody what we learned earlier that. The 36% -- the interest. But -- we're shall not talking about all the fees so it continues to add up. Lets you bring up a very good point I appreciate the call let's go to Joseph in Metairie. And I know that they were good. I -- -- I'm Scott didn't pay Tivo right now I'm -- effort to bookmark. A ridiculous thing I originally got the low -- one more. But now or -- now -- mark there. Company encrypted the more you know about six more active public opinion -- I don't have the money to pay -- now. Cochran won't interest rates and would still talk about how much -- your original loans more. I bought for sixty cocaine in it reflected the current outlook and that remark out of their 400 in that he took a deep. So he keeps paying money he has paid more now than he actually borrowed and he's not touched the principal. This is the business model he's he's explaining it exactly the way it works. -- when you're not gonna have that money they say that's fine. Will just give you another loan it'll cost another fifty dollars say puts down another fifty dollars he has not touched the principle it builds and builds from there and that's how people get caught because base and they set it up. When they give these loans out they know the person cannot pay it back within and among. And so they know they'll be back. To renew it and so we asked a woman who had borrowed 500 dollars we said sit down and do the math -- how much did you end up spending. In order to pay back this flown -- said please don't make me do that because I don't want to think about it we said no. We need to know how much you spent before you got out of this cycle she hits -- 5100. Dollars on a 500 dollar fine. I'm a loan of 500 dollar -- gosh. It what can this man do. How does -- get out of this. What I -- How I would hope it would be our analysts doubt never doubt that it would you know go to a credit union bank and the dollar to create an assault as quickly as you can accredited and try to. And I don't know animation. You know they are right it's just bill addresses district -- treat people -- Sam percent. But not to exceed. 36%. Interest and cities. OK you know annually so and so what we're trying to do it and the reason we came out was 36%. Just because congress passed that protect military personnel are great as much rather not I would like -- But but and trying to you know follows and look how we're protecting nonmilitary. Veterans and those what -- -- you know we wanted to premiere. And hopefully we should you know have something lower wouldn't there's an awful. I can tell you we're trying to do away credit toward. Ending the war happens -- the country and they all their party. And the article that we are and then I go to the next level. And there are actually sitting there planning out there won't -- she's -- -- our blog at you and he has. And that while we call for the quarter ending -- -- would do -- it would at least you know. I I appreciate those content to get another caller Brian in Gonzales. Pay -- not. An advocate payday loans quick shipper farm -- the people that are going to pay -- floats. Are people cannot get loans anywhere else because they have -- Terrible credit card at no credit nobody's gonna -- much. You know my daddy taught me a long time ago -- -- -- Don't deal. So why don't say why don't these people take some responsibility. As well and not even though he's low place I think you know that. The fact that they're paying exorbitant interest rates one of the reasons I believe that these -- so there's probably a lot of the also these well. Faults are actually very very low because when they go in and two weeks they say. Oh don't worry about it just take out another loan and that will cover it and as far as responsibility. Goes. A person is responsible for that first decision that they say I am stuck in -- needs some help and so they go for some help. But then the predatory practices. Catches them in a trap and said that's what we're saying should be regulated. Not that these people are being irresponsible but they are being. Brought into a business model that is made it to trap them so whether we are responsible are not we are being tricked. By this type of business model I believe we have a woman Thelma Thelma. You have experienced the situation with a payday loan. -- may I ask what your original loan -- Layoff now region alone because -- it like. Maybe pack of bills. And -- some -- act hundred dollars or regional -- we've -- it. Doubt without -- best interest. Somewhere 300. It out of -- don't -- it would be. And and how much have you paid do you know. I'm not follow what interest that it went all let me real good year. -- -- Thousands. Have you paid it off now. -- -- We were talking in the commercial about. There are credit unions and please jump in here that can help. It ultimately how did you pay it off was it that with help with family and friends. You know what actually happened packet so many coming into not buying. It rankled by chicken account. The current state union to balance because money wasn't an eight year. -- -- -- -- -- -- And I was able to give them the money -- packet heated to him rather that -- Send it to black bank if -- we saw it written lots -- something might be a little bit ridicule. When they technical market panic Alan and I hit it just deal with -- savings account when my paycheck were impacted. So that's one -- the business that's part of the business model as well is that bomb that they get a hold of your bank account. And they will take out the money like academic card and a payday loan get a hold your debit card. They will take out the money first that -- -- and they knowing your paychecks can hit -- what you have to tell them is when your paychecks and hit. They will take the money out first so now you're not gonna have the money for the rest of your budget which means you have to go back to the payday loan and take out and other lung. So they keep hitting your bank account. And pulling out money so that you had nothing left for the rest your budget and so you have to take -- -- -- I know I hit it yet another world paid -- -- -- -- that we like maybe our exit Leo and when European interest you know you -- I can feel a little light but. It one pack and -- just took all of their mind -- one hand and everybody else it's it's bounce bounce. It it -- All of the queen because -- -- -- -- -- right like aggregate balance it struck. Our situations. -- and definitely it -- -- or. We heard one woman tell the story that she had 740. Dollars in overdraft fees -- -- was done that's not counting the fees from the -- in in the interest from the fate in own. And they don't run in this money through your bank and so you also have an overdraft Thelma I really appreciate you calling in and and telling us about that a people need to see real examples but -- very very much I appreciate it a wanna go back to the senator and I. Need to talk to two -- Diane and the reverend. This bill -- goal in 84 senate bill 84. You're saying is the real deal but there -- the other bills that will confuse it. Novel by -- some other bills that deal of this. -- giant as one of the outlook for the addition of this and and that -- there shall I can't name date and try to do away with toward winning and that's what. -- -- Custom multi bit. And of course the entry atlas there's and best obviously and in this state I don't know. Certainly they are doing everything -- -- and there's to kill this deal. But but let me say this. -- one point we need to make gish is statistics show us that there's. There's one payday loan almost every 4800 people aren't reaching them. And in some places -- one payday loans for somewhere around a thousand rid of the punch. Sure there's more payday loans in upstate and on my own. And and there's a reason for. All warned his convenience. Quote for those that might want to Ike operated alone a second one is -- You know all farm my -- is in charge people a -- him. Under their business Wear them. And I decided that they'd get him in this. -- -- -- -- And that's what I'm trying to you know I'm not out Jews couldn't do away it was you know businesses and crushed by but I am. About doing away with predatory lending and that's what are two entries about how. And and we can't actually had any player of the net someone -- charge. Three of 400% interest or even our. Own a 300 dollar home and -- and a year we have to put stop. Well we're gonna stay very close to you senator numbers and and followed that bill and even if we have to do another show. I wanna go to a couple of of caller Bobby in Marie Airpwn. -- -- -- -- Yes all I wanted to say on -- does bill comic in any of these regular patient were always -- -- businesses. I agree with the call earlier in -- responsibility. You know -- opted to enable and years ago we're not -- financial. And I needed money so it's -- that they went out yeah updated these ridiculous interest rates you know like. I accept that responsibility that's something that I had to do. The problem we're regulation. Every -- new regulation comes well. Prices and a borne out something else for people that don't use service you know -- still punishing businesses. It's about the on the stored individually responsible they'll match. But you know as was mentioned earlier. Every financial institution in the state is regulated except payday loans -- to find that odd. Yeah up spotted job outrageous out how does it regulates that's what -- would -- a -- -- That's why my alleged -- 300 -- to regulate. Aren't -- asking -- that we're asking is that. On these businesses be reasonable. Just like other lending institutions and so that is why. 36%. Is a reasonable amount anything else -- predatory we have decided as citizens of this state. That 45%. Interest rate is loan sharking and there is no reason why any business should be able to charge more than what we -- legally say. Is is wrong and 45%. Being long sharking and so we're simply asking. That we regulate the businesses at 36%. And I'd like to say. That that is a real reform far and for the payday lending industry they are all kinds of different reforms some of them. Do not address the business model that we're talking about these are businesses that are not regulating themselves they are taking advantage of people and when a business does not regulate itself. Then we have to come in and regulate them some money might wanna buy. Some lettuce and if the lettuce is bad then you don't say what they need to be responsible for making sure the lettuce is a bad note if that company doesn't make sure that it's lettuce is good then the government comes in and protects people from that kind of company. So if the company is harming people that company needs to be regulated and this business model is harming people. And so we have to make sure that we had. -- interest rates cap on these businesses and another way to make sure that they are on that that they are trained in is that we make sure that people don't take out too many loans because that's the business model to make sure that they take out for any of loans and a cousin that people are taking out. Five T and loans a year which is what keeps them -- the issue is. Changing the payday loan structure in the state. It is senate bill 84 I cannot thank senator numbers so much for what you're doing and for being on the show. Diane handling and reverend -- to name. I think we've learned a lot what you're saying clearly is this is not getting rid of payday loans it's going to limit them to the 36% interest and that's the bottom line. If you are interested in this and you want to talk to your senators. The number is 2253422040. Senate phone number 2253422040. Just get the interest rate down to 36%. We will continue this another time because really I feel badly I didn't get to the callers. But clearly there's a problem. We'll talk again thank each and every one of --

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