A United Methodist bishop testifies on the scandal of predatory lenders who often charge as much as 400% interest. Bishop Minerva Carcaño called for a cap on the amount of interest that can be charged.
When she became ill, a widow living on $500 a month couldn’t pay her medical bills and still meet her basic cost of living. She didn’t want to be a burden to her children so she got a "payday loan," thinking when she was well enough she could earn some extra money by sewing clothes or making tamales to sell.
She never got well. The stress of the illness and the worry of a loan that kept spiraling out of control cost the widow her home, her independence and eventually her mental well being.
United Methodist Bishop Minerva Carcaño wanted congressional lawmakers to hear that story and others of people she knows who have been victims of "unscrupulous, predatory payday lenders.
The bishop spoke at a June 4 hearing to brief lawmakers on why all families should be covered by a 36 percent rate cap on consumer loans. Payday lenders charge as much as 400 percent interest on loans that usually average $500. For a $500 loan at 36 percent, fees are $180 over one year; at 391 percent, fees are $1,955 over one year.
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