Payday Lending: The Real Story

Every year, millions of Americans are trapped in 400 percent interest payday loans, paying more in fees than they originally borrowed. Payday loans are designed to be unaffordable , so that the lender can collect multiple interest payments of about $50 every two weeks for the same $300 or so, in a series of renewed loans or back-to-back transactions. Current proposals to cap annual interest rates at 36 percent for consumer loans, similar to what was passed in 2006 for military families, are currently moving through Congress. Fifteen (15) states have approved a similar measure already, and over 70 percent of Americans support a cap of 36 percent or lower. The Center for Responsible Lending has launched a project to collect stories about real people caught in this devastating financial quicksand. If you or someone you know has been caught in a payday loan that you expected to get you through a short-term cash shortfall, consider sending in your story either anonymously or with the name included. The goal is to collect 400 stories to represent people affected by 400 percent interest rate lending, and ultimately post them at www.400faces.org . Check out two stories featured in a new video on the site, and consider adding your own local stories.