The voice on the other line — from one of the many payday lenders in her neighborhood — says they miss her. Do you need any extra money? the voice asks.,For years, Williams spent every payday driving to as many as nine stores in three separate towns, paying an $87 fee for each $400 loan she had taken out.,Jennifer Williams, a high school teacher in Cleveland, Miss., conquered $4,000 of debt from multiple high-interest payday loans. Williams believes these lending stores are sucking the life out of people.,I was taking out payday loans to pay bills after I had spent the majority of the money (in my paycheck) on payday loan fees, said Williams, a high school teacher in Cleveland, Miss.,Williams finally whittled away the $4,000 debt she accumulated from multiple payday loans after taking a financial course in 2014 from Arkansas-based Southern Bancorp, which offered a lower-interest loan upon completion.,Youre making fools of us, she said of the payday lenders. You know we need it and you know were going to take whatever interest rate you give us, especially if its to survive.,Consumer-protection advocates saw hope in rules the Obama Administrations Consumer Financial Protection Bureau, the federal agency that looks out for customers interests in the financial industry, proposed to regulate the industry considered usurious by its critics.
But the payday loan industry has sued in federal court to keep those rules from taking effect next year, while President Donald Trumps Administration is lobbying for more time to rewrite, and most likely weaken, them.,Meanwhile, the Mississippi Legislature quietly gave new life to a law that created a new kind of small-dollar loan just in case the Obama-era rules moved forward. The draft version of the federal new regulations would require, among other things, that lenders better verify a borrowers ability to pay back the loan.
Writing loans without reasonably determining that consumers have the ability to repay the loans, would be classified as an unfair and abusive practice, according to the CFPBs website.,This chart shows the cumulative fees a lender could levy against a borrower on a $2,500, 12-month installment loan.,Zuber did not return messages seeking an interview for this story nor did the Community Financial Services Association of America, a trade group that lobbies for payday loan businesses in the state.,The consumer installment loan is described as a hybrid between the payday loan and title loan — in which a person swaps the title of their vehicle for cash. Under an installment loan, a lender can loan up to $2,500 — six times the largest payday loan allowable by state law — and has greater recourse against delinquency than under a title loan.,Lenders can charge up to nearly 300 percent annual interest on consumer installment loans, which are mostly offered in payday lending and check cashing stores.,After the law passed in 2016, 200 stores applied and received a license to offer installment loans.payday loans highland ca
Another 160 received the license in 2017 and 25 more this year so far.
Many of these 385 license-holders have multiple stores across Mississippi.,Jennifer Williams, who serves as a kind of financial counselor for her friends and family, consulted a friend who wanted to take out a $2,000 installment loan, which could rack up $4,507.42 in fees over a years time. Williams discovered her friend would pay back over $6,000 by the end of the year and advised her against it.,In 2017, the PAC for Financial Service Centers of Mississippi, the firm that lobbies on behalf of payday lenders, donated $25,800, though it did not itemize the contributions in its report on the secretary of states website.,Another political action committee that donates on behalf of small loan companies, Lenders PAC, gave state officials $78,100 in 2017, $37,100 in 2016 and $145,000 in 2015.
Lenders PAC, the most prolific of related donors, according to available reports, represents other small loan companies besides the payday lenders, such as Tower Loan, and did not lobby for the Credit Availability Act. The loans offered by Tower Loan are capped at 59 percent annual interest.,Under the installment loan, folks can borrow up to $2,500 with a monthly interest cap of 25 percent, which translates to 297 percent in annual interest.
For anything over $500, the borrower has up to a year to pay off the loan, during which the interest accrues month after month.,Unlike title loans, the installment loan comes with legal recourse for the lender. A lender can go to court and receive a judgement against the borrower over nonpayment, whereas with a title loan, the only recourse is to repossess the vehicle and hope to make the money back.,Charles Lee of the Mississippi Center for Justice said the installment loan is no better for a consumer than a payday loan or a title loan just because it allows a longer payback period.,Lee said teachers and other state employees are especially susceptible to the offerings of payday lending because theyre only paid once a month, making budgeting more difficult.,Mississippi law prohibits these stores from lending more than $500, including fees, in payday loans per customer, but that doesnt stop borrowers from visiting multiple stores in order to stay afloat.,With the installment loan, lawmakers expect lenders will educate consumers on the front end about what fees may incur over the lifetime of the loan.,What else that were trying to do besides make it easier to pay back these loans is we want more disclosure, Zuber said on the House floor.
We want full and open disclosure, and we want to make sure the person trying to get these loans knows exactly what he or she is contracting for.,Rep. Kathy Sykes, D-Jackson, who represents many low-income neighborhoods, co-authored the 2018 bill to reenact the law creating installment loans.,Sykes said she didnt realize the fees could be as high as $4,500 for a $2,000 loan, as Mississippi Today found.,But theyre up against the convenience and accessibility of a seemingly unlimited number of stores advertising fast cash in primarily low-income and minority communities.,Today, Williams said she would go without before going back into one of those stores. That doesnt mean closing all payday lending stores is whats best for her community, she added.,When signing the Mississippi Credit Availability Act in 2016, Gov.
Phil Bryant said high-interest installment loans would not appeal to most Mississippians, adding that he supported the legislation because he believes in greater consumer choice, personal responsibility, and free market principles.,Lee would agree with Gov. Bryant if payday lenders were in everybodys communities and not just in some.,Editors note: A previous version of this story included the total donations to lawmakers from Mississippi Consumer Finance Administration and Tower Loan, which are regulated under a different state statute than payday and title lending companies.
Additionally, neither the MCFA nor Tower Loan lobbied for the passage of the Mississippi Credit Availability Act.
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