Payday loans, though advertised as a quick fix to money problems, thrive off of stripping hard-earned money from the country’s most fiscally vulnerable populations, including Latino/as. Payday lenders target the Latino community, checkering neighborhoods with storefronts to trap unsuspecting consumers into cycles of debt, as maps of Florida cities show in the Center for Responsible Lending’s Perfect Storm report.
Because of payday lenders’ continuous preying on Latinos, they are more susceptible to taking out predatory loans than the general population. In California alone, Latinos account for a quarter of the population that are eligible for payday loans, they make up 37% of all borrowers. Like other borrowers, they typically take out loans for basic living expenses, but then find themselves teetering on the brink of financial ruin, highlighting the $247 million that have been robbed from the Latino/a community in California.
“My experience with a payday loan trapped me in a debt cycle. I took out loans to pay my taxes, health bills, and basic necessities as I was in between jobs. I was living in the San Francisco Bay and I took out a loan in Oakland, but I was not able to pay it off, so then I went into another store in San Francisco to pay off my original payday loan. Eventually I borrowed at least 10 payday loans and owed over $2,500 dollars … It brings back too many memories as I was in turmoil. Don’t do it. It’s not worth it. It’s a trap!”
— Cassandra from Sacramento, California
Payday lending damages underserved communities by draining money from local economies. By cutting investments and the flow of money into small businesses, Latinos face further financial instability. President and CEO of the National Council of La Raza, Janet Murguía says, “Payday loans might sound like a good option, but they are intentionally structured to keep borrowers in a cycle of borrowing and debt that causes millions of hardworking Americans extreme financial difficulty.”
“In desperate need to get his family through the holiday season, Alfredo took out a $1,000 payday loan from Regency Financial in Mentor, Ohio. He had two years to pay it back. Since taking out his initial loan, Alfredo has had to renew two more times. Because of the payday lending debt trap, Alfredo has had to shell out a staggering $5,000 in fees.”
It is time to turn the tide. In a new poll, fully74% of Latino/as support regulations against predatory payday lenders. You can support a strong rule from the Consumer Financial Protection Bureau by making a comment here.
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