Folks relying on payday loans for Christmas cash pay long after season ends

By JASMINE RIDLEY, Published: Tuesday, 12/18/07 , Tennessee Voices

When I think of Christmas, I think of joy and happiness, presents and food, family and fun. I love this family time and, like everyone, the presents.

But I come from a single-parent home where my mom works full time every day to provide the basics for my sister and me. I would be truly grateful if I got just one thing off my "wish list" for Christmas, and I know how hard my mom works and tries to save to make this possible.

Every year, kids like me and parents like my mom want Christmas to be a special time, but every year families in my east Nashville community fall prey to predatory lenders, like payday and title lenders, to make this happen. Many people who can't afford to buy Christmas presents frequent predatory lending establishments to get Christmas cash and end up having to pay for holiday debt long after the season is over. ( >To continue: Folks relying on...)

My Commentary
Jasmine Ridley, a junior at Maplewood High, has written a very good article on the topic of pay day lenders. I commend her. I hope this article reaches a lot of people and the adults in her community take heed. As long as the loan-sharks are legal, the only way to oppose them is by educating the public.

I routinely see low-income people who have taken out these loans with interest rates that may be as high as 390% interest. The payday lenders, pawn shops, check cashing businesses, title lenders, and income tax preparers who market "rapid refunds" prey on the poor. I have counted over twenty such establishments in the section of Nolensville Road between Glenrose Ave. and Grassmere, a distance of about two miles. This area of Nashville, known as Woodbine, is a predominantly working class white and Latino neighborhood. All of the low-income areas of town likewise have a large number of these businesses.

I am not sure to what extend we should protect the poor from making unwise decision. To some extent, to protect them by removing the temptation of high-interest rate loans seems paternalistic and insulting. No one holds a gun to their head and makes them take out a 400% interest loan. After we ban high-interest rate loans should we next ban the sale of lottery tickets, beer and wine? Should we then ban the Rent-a-Centers? There is a limit to how much protection from themselves we can provide the weak. On the one hand, free people should be free to make stupid decisions. On the other hand, I feel we have an obligation to prevent the powerful from preying on the weak. While we can not stop all abuses or protect everyone from making stupid decisions, I do not think anyone should able to charge 400% interest.

I would wish that we could educate people to the point that they would choose not to be victims. I wish the poor would be insulted that they are being offered such loans and would refuse to be victims any longer. At my place of employment (Woodbine Community Organization) we try to educate the poor. In our Homebuyers Clubs, and Financial Fitness classes and in one-on-one counseling sessions we try to help people improve decision making and money management skills. By offering the free Volunteer Income Tax Assistance (VITA) services, we keep people from going to the tax preparers who will try to sell them a tax anticipation loan at rates of up to $360% interest.

I doubt anytime soon our state legislature will crack down on the predatory lenders victimizing the low-income. As for now, the immoral payday lenders and other predators are legal. We can only hope that voices like Jasmine's will reach enough people so that they will chose not to be victims.

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