The following is a re-post of a recent blog from KBC Executive Director Paul Chitwood on the important issue of payday lending. With time running out in this year’s Kentucky General Assembly session, a bill to cap payday loans at 36 percent is stalled in a House committee.
Call Now to Support Payday Lending Cap
Dr. Paul Chitwood
As the state legislative session in Kentucky continues to progress, we have been able to celebrate some significant decisions for the families of the Commonwealth. The Religious Freedom Amendment was passed overwhelmingly by the State Senate. The Senate also soundly defeated the casino bill, as well as the so called “Bullying Bill” that sought to give special rights to students who practice homosexuality.
Another item we hope to see addressed is “payday lending.” In short, payday lending is an easy to get, “short-term” loan available at a ridiculous interest rate. Loan sharks use these loans to further entrap the poor.
The Kentucky Baptist Convention, meeting in its annual session Nov. 15 at Florence Baptist Church at Mt. Zion, passed a resolution calling for the capping of the interest rate on “payday” type loans at 36 percent. The current loans, which can end up having triple digit interest rates, tend to target the poor and can entrap them in an endless cycle of growing debt. The resolution, submitted by Dr. Joseph L. Owens, pastor of Shiloh Baptist Church, Lexington, appears here in a slightly shortened form:
Whereas the Bible has spoken clearly about loaning money at interest (Exodus 22:25-28; Leviticus 25:35-37; Deuteronomy 23:19; Psalm 15:5)
Whereas the Christian faith has historically opposed and deemed usurious loans at exorbitant rates of interest, especially to those who are poor
Whereas these products are predatory in nature, designed to entrap households in debt through a combination of high fees and short repayment periods resulting in interest rates as high as 391% APR (annual percentage rate)
Whereas these lenders primarily serve people who are poor or in financial distress and often perpetuate and increase their financial distress rather than offer an avenue out of financial distress or foundation for fiscal stewardship
Whereas we recognize the sinful and fallen nature of human beings and the just role of government to protect people from predatory activity (Romans 13:3)
Whereas seventeen states and the District of Columbia protect their borders from predatory lending by enforcing two-digit interest rate caps and federal law establishes a maximum rate of 36% APR for small loans to military personnel
Be it resolved that the Kentucky Baptist Convention encourages state and local units of government to restrain exorbitant interest by establishing a cap of thirty-six (36) percent for all small loans and any other protections necessary to protect individuals from lending abuse.
As we have seen time and again, when citizens speak out on an issue in Kentucky, our elected representatives often respond. Add your voice on this issue by calling Frankfort and expressing your support of the payday lending bill. Tell your representatives to protect consumers and cap payday loans at 36 percent. Call toll-free 1-800-372-7181.
