{"id":5,"date":"2015-01-27T17:24:39","date_gmt":"2015-01-27T17:24:39","guid":{"rendered":"http:\/\/stories.kera.org\/inside-neighborhood\/?page_id=5"},"modified":"2015-12-22T21:55:53","modified_gmt":"2015-12-22T21:55:53","slug":"payday-lending","status":"publish","type":"page","link":"https:\/\/stories.kera.org\/inside-neighborhood\/payday-lending\/","title":{"rendered":"For Working Poor, Payday Loans A Pricey Way To Pay Bills"},"content":{"rendered":"
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In Jubilee Park, a Dallas neighborhood wedged between Interstate 30 and Fair Park, many people live on the financial edge. And if they fall off, sometimes it seems like the only safety net is a payday loan. They\u2019re designed for emergencies, but critics say they\u2019re designed for default. One Jubilee resident is working to buy back her car title, which she borrowed against last summer.<\/em><\/p>\n

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\"Maribel

Maribel Del Campo, center, leads a Zumba class held in The Old Church at Jubilee Park across from Jubilee Park Community Center. Photo\/Lara Solt<\/p><\/div>\n

At the Jubilee Park Community Center, things can get pretty busy. There\u2019s Zumba, and seniors are eating lunch.<\/strong><\/p>\n

But there are moments of quiet \u2013 so quiet that the loudest thing in the room is Gloria Lopez typing.<\/strong><\/p>\n

\"jubilee22NEW\"

Kids run down a street in the Jubilee Park neighborhood. Photo\/Lara Solt<\/p><\/div>\n

She\u2019s been volunteering here for years, and took on a part-time job in May. As a receptionist, Lopez takes home $1,000 a month. The man she lives with makes about the same remodeling houses.<\/strong><\/p>\n

\u201cRight now, I think my checking account has probably about $100 after I got done paying all my bills,\u201d she said.<\/p>\n

Two thousand dollars a month doesn\u2019t stretch far when it has to cover a family of three. Lopez has a 12-year-old son to care for, too.<\/p>\n

\u201cMy main concern is him right now,\u201d she said. \u201cIf I don\u2019t have money set aside for him in an emergency, if I have to take him to the hospital or buy some medicine that Medicaid won\u2019t cover. If I don\u2019t have it, he doesn\u2019t have the medicine.\u201d<\/p>\n

Lopez does her best to pay the rent, bills and keep a little for extra expenses. She doesn\u2019t always make it.<\/p>\n

\u201cAnd when we can\u2019t make it, we go to the loan place,\u201d she says.<\/p>\n

A $600 loan costs $2,000<\/h3>\n

That\u2019s where she gets a cash loan \u2013 but she has to hand over her car title while she pays it off.<\/p>\n

\"Gloria

Gloria Lopez, a worker at Jubilee Park Community Center, takes out high-interest loans to cover her bills. Photo\/Courtney Collins<\/p><\/div>\n

If you don\u2019t pay the loan off, there\u2019s a fee added every month. If you don\u2019t pay that, you lose your car.<\/p>\n

That\u2019s never happened to Lopez. She\u2019s borrowed money this way three different times. She\u2019s still working to pay off the last loan, which she took out last summer.<\/p>\n

She has to pay a $230 fee to take out that loan. Each month, another $230 is due. Lopez says it usually takes her six to eight months to pay it all off.<\/p>\n

That means she\u2019s paid about $2,000 on a $600 loan.<\/p>\n

\u201cWhen all the credit available is credit that is exceedingly expensive at rates of 300 to 600 percent interest, it is draining the financial stability of our families,\u201d says Ann Baddour with Texas Appleseed, a nonprofit working for loan reform.<\/p>\n

\u201cAnd what we\u2019ve seen is an explosion in very high-cost products.\u201d<\/p>\n

Payday and car title lenders can get around state limits on interest by charging fees to roll loans over.<\/p>\n

Baddour says two years ago, one of every 10 Texans took out this kind of loan. More than half of that group had to refinance — and most re-financers rolled the loan over four or five times.<\/p>\n

\u201cIn our mind, predatory lending is a situation where you have lender success, and borrower failure,\u201d she said.<\/p>\n

\"Many

Many Texans use payday loan stores, such as this one on Greenville Avenue in Dallas, to pay bills. Photo\/Courtney Collins<\/p><\/div>\n

A solution: Employer-based lending<\/h3>\n

So what\u2019s the solution? Baddour says the state could enforce a cap on interest rates and fees.<\/p>\n

Another option? Finding fair alternatives for borrowers.<\/p>\n

Paul Randle is trying to make that happen with the nonprofit Community Loan Center of Dallas.<\/p>\n

\u201cThis program was tested and piloted in the Rio Grande Valley where they have made over 3,400 loans lending over $3 million,\u201d Randle said.<\/p>\n

That program is known as employer-based lending.<\/p>\n

\"Paul

Paul Randle is with the nonprofit Community Loan Center of Dallas. Photo\/Courtney Collins<\/p><\/div>\n

Here\u2019s how it works. The nonprofit puts up the loan money, and signs up employers. Once a company commits, its employees can take out loans for a $20 fee at a fixed interest rate of 18 percent.<\/p>\n

That may sound high. But compared to the fees on a payday loan, it\u2019s a bargain.<\/p>\n

You can borrow up to $1,000 at a time \u2013 or 55 percent of what you earn monthly.<\/p>\n

\u201cYou can\u2019t borrow more than you make,\u201d Randle said.<\/p>\n

The repayment is automatically deducted from the workers\u2019 paycheck, over the course of a year, so you can\u2019t miss a payment.<\/p>\n

And that bolsters your credit score.<\/p>\n

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Across North Texas, Lots Of Payday Lenders<\/h3>\n

There are hundreds of payday stores across North Texas — nearly 300 in Dallas County alone. They\u2019re often covered in bright lights and large signs, with messages like \u201ccash advance\u201d and \u201cpay bills.\u201d<\/em><\/p>\n

A payday lender will give you a small loan in exchange for a fee. The fee is due up front, while the loan amount is due on your next payday. If you can\u2019t pay the complete loan by your next payday, you can roll it over another two weeks, but you must pay the fee again. Many people roll these loans over several times.<\/em><\/p>\n

This map shows where payday lending stores are located in Dallas County as of January 2015.<\/em><\/p>\n<\/div>\n

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Reference USA<\/a>\u00a0queried payday lending locations using this NAICS Code #522390 (other activities related to credit intermediation<\/a>).
\nMark Gilman of the Dallas Public Library<\/a> conducted research for this graphic.<\/div>\n
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Graphic\/Ryan Tainter<\/p>\n

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A computer class at the Jubilee Park Community Center in Jubilee Park. Photo\/Lara Solt<\/p><\/div>\n

Payday lender: We offer transparency<\/h3>\n

Randle says it feels good to help people get on their feet. After a year working in the corporate office of Texas-based payday lender ACE Cash Express, he says he needed a change.<\/p>\n

\u201cIt was very sad; it got depressing,\u201d he said. \u201cThat I was calling and preying on them, and hounding them and saw the excessive fees on the back end that was being charged to them.\u201d<\/p>\n

Eric Norrington with ACE Cash Express says every borrower knows exactly what a loan is going to cost. There aren\u2019t any hidden fees or surprises.<\/p>\n

\"Kenneth's

Kenneth’s Barber Shop is located in Jubilee Park in Dallas. Photo\/Lara Solt<\/p><\/div>\n

\u201cWe work hard to provide clear, transparent terms to consumers,\u201d Norrington said. \u201cWe post our fees in the lobby of our stores. We offer a two-week signature loan at a rate that is often more favorable than overdrafting a checking account or bouncing a check.\u201d<\/p>\n

ACE does allow borrowers to opt into an interest-free payment plan once a year. That means you can pay off your loan balance by splitting it into four equal payments.<\/p>\n

Rob Norcross thinks there will always be a market for small dollar loans. He\u2019s with the Consumer Service Alliance of Texas, the trade association that represents companies like ACE.<\/p>\n

\u201cPayday stores and the auto title stores fill that place in the marketplace and provide credit for predominantly credit-challenged folks,\u201d Norcross said.<\/p>\n

Four years ago, the city of Dallas enacted an ordinance restricting payday lenders. It limits rollovers to three times and loans can\u2019t exceed 20 percent of a borrower\u2019s monthly income.<\/p>\n

It\u2019s not hard to get around that though. The company Gloria Lopez uses is outside the city limits.<\/p>\n

\u201cI don\u2019t think people would do it because they want money, they want to go spend it,\u201d Baddour said. \u201cThey normally do it because they need it.\u201d<\/p>\n

Critics of payday loans say that\u2019s exactly what predatory lenders are banking on.<\/p>\n

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A soccer field donated by FC Dallas Foundation and the Embassy of the United Arab Emirates. Photo\/Lara Solt<\/p><\/div>\n

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Video Snapshot: Explore The Community Center<\/h3>\n

The Jubilee Park Community Center offers several programs that help a variety of people, from children to seniors to those who want to learn English. In this video, explore the center.<\/em>
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