Cheri Amos knows the problem of payday lending first hand. Her ex-husband borrowed so much that her life changed forever.
The YWCA Central Alabama — in association with the Alliance for Responsible Lending in Alabama, a coalition of groups working to reform lending laws in Alabama — will host a “Fair Lending Rally” on March 2 to raise awareness of problems that people like Amos face from such lending companies.
Payday loans are short-term loans accessible to people who have jobs and checking accounts with no credit check. Typically, borrowers promise to repay the loans on their next payday and are charged 17.5 percent interest for that period, which generally is two weeks to 30 days. Borrowers give lenders checks dated for their payday.
Thus, a $300 loan carries $52.50 in interest. A $500 loan, the highest allowed by Alabama law, costs $587.50 to repay. That equals as much as 456 percent annual interest.
Many payday lenders require borrowers to return on payday with cash to cover the loan and interest. If they do, they get their checks back; if not, the lender cashes the check. Some lenders simply cash the checks on the borrowers’ payday instead of asking borrowers to pay in cash.
Borrowers frequently take out another loan immediately after they repay one.
Title loans, which are basically pawns of car titles, carry the same 25 percent per-month interest allowed for pawn shops, or 300 percent annual interest.
Amos’s experience shows that even though she did not borrow the money herself, it still affects her life. “I didn’t know this was going on until I had to cash a check for $25 and was told there was no money,” according to Amos. Along with getting payday loans, her ex-husband started a cycle of getting title pawns and going to pawn shops.
“They say you can only get one payday loan at a time,” Amos said. “Well, that is a lie. He had over 24. … I didn’t go out and do this behavior. What it did was it affected me in that I lost our home. I lost all my money. I lost what he lost because of his actions and choices.”
Her ex-husband began check hiding — writing a check over the amount of what they purchased, and then receiving the excess in cash. Check hiders might follow the same procedure at several locations, including grocery stores, with the knowledge that the money is not in the bank account, but that checks take time to clear. “I was blown out of the water, I didn’t know this could happen,” Amos said.
“Today, I am working three jobs to keep my nose above this. I rent my home, I own nothing, and I am putting two kids, twins, through Auburn University by myself,” Amos said. “I need to give back to a society that needs to become educated. It doesn’t just happen to the borrower. It happens to everyone connected to that borrower.”
The payday loan industry gets much of the blame, she said. “Because of this industry, it ruined a man, ruined his life, he is never getting back what he lost. He cannot face what he did. It made his children better and stronger, but they lost a dad. I lost a husband. I have shown them we are better, we are stronger, and thank God, we will overcome. We will overcome.”
This year at the third Fair Lending Rally, there will be no admission cost and lunch will be provided. The event will focus on fixing common problems surrounding payday loans.
“One crucial issue with payday loans is that borrowers can get multiple loans from different lenders at the (virtually) same time,” according to Joan Witherspoon-Norris, the director of social justice at the YWCA. “Somebody can go to one payday lender and borrow $500 and then go to another lender and borrow another $500.” There is no database to show how much a person already has in payday loans in Alabama.
To talk about issues with payday loans, there will be various speakers from several organizations, including the Southern Baptist Convention of Alabama and Alabama Citizen Action Program. “One thing that is nice about this issue is that it is nonpartisan,” according to Witherspoon-Norris. “People come at this issue from a variety of perspectives, so it’s a real mix of folks who care about this for a mix of reasons who come together for one cause, and that always feels good.”
The Fair Lending Rally will be held at the YWCA downtown, 309 23rd Street North, 11:30 a.m.-1 p.m. March 2. For more information, visit facebook.com/ARLAlabama and ywcabham.org.