USA TODAY International Edition
Miss. women warn payday loan ‘ affects you in the long run’
Payday loan outlets with interest rates of up to 521% are so prevalent in Mississippi that they outnumber McDonald’s restaurants by more than 5 to 1, USA TODAY has found.
The Mississippi Center for Justice, a public interest law firm, is working with a few cities and local banks in the state to teach residents about financial literacy and budgeting through a program called New Roots Credit Partnership. One of the goals: Get residents to stop using payday loans, which the law firm claims are predatory, especially in predominantly Black communities.
But INFiN, a consumer lending alliance that represents payday lenders, said its members are offering uncollateralized, low- dollar loans to residents who need quick cash. It says many borrowers need the money for food, utilities, rent and prescriptions. The maximum payday loan in Mississippi is $ 500.
Here are the experiences of three Mississippi residents who have been dealing with payday loans:
Brandy Davis, 44, has a doctorate and master’s degree in business administration and said her advanced education came about from experience with payday lenders.
Davis, who lives in Olive Branch, said in 2010 she was a high school teacher having trouble making ends meet.
Davis said she needed about $ 600 for a utility bill, and obtained three separate payday loans from different lenders in one day.
However, when payday came, she couldn’t fully pay off the debts.
So, she said she kept getting new payday loans to pay off the old loans, with fees being tacked on each time with compounding interest.
After a six- year cycle, Davis said she had racked up more than $ 10,000 in payday loan fees and interest from her numerous short- term loans.
“I was in a whirlwind, and I got in a state of depression,” she said.
Davis said she considered filing for bankruptcy protection, but said her mom’s insurance agent advised her on a plan about how to budget and
settle her payday loan debt.
“Where we live in the Mississippi Delta and being surrounded by poverty, sometimes we find ourselves at the mercy of payday loans,” said Davis, who now works in academic affairs at LeMoyneOwen College in Memphis, Tennessee. “If you are in poverty, it will take you down.”
Tisha Willis, 50, said she has never borrowed from a payday lender after working in the industry for five years.
“I know better,” said Willis, who lives in the Jackson suburb of Florence. “I wouldn’t advise anyone to do it. … If you go in one time, they will keep you needing that money.”
Willis said she took the New Roots Credit Partnership financial literacy course and learned how to improve her credit score, which allowed her to buy her first home – a five- bedroom house for her large, blended family.
“It’s open to all of them. It’s a family home,” said Willis, who works for the city of Jackson in constituent services. “When my dad gets old, he has a room. It’s a generational house.”
Willis said she encourages others who may be in a money bind to consult with a financial expert and “not run to payday loans.”
Vokeya Hughes, 39, said she needed some cash in 2018 to pay for funeral expenses.
She said she was approved for at least a $ 500 payday loan through an online company but was unable to pay off the entire debt.
Hughes said she then lost her job and couldn’t pay at all.
Eventually, Hughes said she incurred more than $ 2,000 in late fees and interest.
Hughes said she eventually paid off her debt, but her credit report showed she still owed the money, which has made it challenging to buy a home.
“It ( payday loans) affects you in the long run, even though I had paid it off,” she said.
Hughes added that when she applied for her loan, it asked for three references and she was offered incentives for those names.
She later found out the payday loan company offered those references loans, and there are payday loan offices on “every corner” in some towns in Mississippi.
“They are right beside each other,” Hughes said.