Call Now to Support Payday Lending Cap

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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.

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2 Comments

  1. Grett & Anna McMulle
    Posted March 18, 2012 at 9:19 pm | Permalink

    Thank you for this article. As we work in the Urban community, there is a walk up loan place on almost every corner. We know this is a part of the problem for the poverty and hardship for these communities. Not only putting a cap on the percentage, I wish they would put a cap on how many could open in a community or city.
    Thank you for being a voice and letting us know how to respond and be active.

    • Posted March 18, 2012 at 9:51 pm | Permalink

      Thank you for your supportive comment. I hope we can begin to see movement on this important issue.