Corsicana Daily Sun, Corsicana, Texas

Opinion

June 27, 2014

Guest Commentary: Dr. Rick Lamb

Corsicana — There is an old saying that “the abuse of a harmless thing is the essence of sin.” (Attributed to either A.W. Tozer or C.S. Lewis, or both).  Simply put:  what is not necessarily a bad thing can become a bad thing when it’s abused. Such is the case with many Payday and Auto Title loans made in the state of Texas. Perhaps some of these businesses are dealing fairly and straightforwardly with their customers, but many of them are fleecing our fellow citizens with fees, charges, and payments that can exceed 600 percent interest.  

I know about this personally from people who have cried out to me, trapped in such loans. Desperate for cash, they borrowed $200 (for example) and end up repaying $600 in just a matter of weeks (if they are able to repay). One of the more detestable practices in my opinion is when these loan companies require the borrower to write the company post-dated checks. When the company deposits the post-dated check, if the account doesn’t have enough money to cover the check, the borrower is now in legal trouble for writing a “hot” check (insufficient funds).  

The high cost and structure of these loans often trap borrowers in a cycle of debt where they continually pay fees and interest but never pay down the loan. Data shows that in the first half of 2012, for example, 75 percent of borrowers had to refinance or “rollover” their loans and nearly 45 percent had to do so two or more times. Over 17,000 cars were repossessed — that’s nearly 95 every day. A new shift towards offering more “multiple installment” loans is also particularly troubling. Just look at what the data found about these loans: In the first quarter of 2012 the average installment loan of $606.50 resulted in a total average of $1,397.63 due at the end of a typical 98 day term. In the second quarter it was $1,691.51 due on a $558.99 loan. (Source: http://texasbaptists.org/files/2012/02/Brochure-FINAL.pdf).

These loans, of course, are made to people who are most vulnerable, and who are also fellow Texans. We need to help “reign in” these companies and practices. Reforms at the state level, so far, have been minimal. I have hope that reforms will eventually be made at the state level but, in the meantime, cities have taken matters into their own hands.  

Cities like Austin, Bryan, College Station, Midland and others have created ordinances that add common sense to control these businesses. One of the more prominent ordinances is to insure that the proceeds from each installment payment must reduce the principal by 25 percent.  Rollovers must have limits and some loans are limited to four payments.  

I made a request to our Mayor and City Council to look into what we could do to protect our citizens in Corsicana. I know it will take time and there will be some considerable debate. It seems to me that our city has more than our share of these types of business. That means more of our citizens are being fleeced and harmed.  

Let’s pray for God’s help and move forward deliberately with ordinances and standards that will eliminate these abuses.

Respectfully,

Pastor Rick Lamb

Northside Baptist Church

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