What To Do If You’re Stuck With A Payday Loan | Opinion

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by jessica love

Has your car or truck ever got stuck in mud? and the more you try to get out, the deeper your tires sink? I’ve got.

So, I know from experience: unless you have the luxury of waiting for things to dry, you’re going to need help, a push or a pull, to get unstuck.

And you’ll probably feel a little embarrassed. I mean, technically, even though you didn’t intend to get stuck, no one else was behind the wheel. Either he didn’t see the danger in front of him, or he thought it wouldn’t be as bad to go through it as it was.

Even if you didn’t have a good way around it, or you calculated the risk and thought you could beat it, the fact is it happened and you were “at fault.” Looking back, he wishes he had done something other than the solution he was looking for, the one that caused his tires to “sink deep into mud and slush” (for his peers). little blue truck amateurs).

Now imagine that the vehicle you are thinking of represents your family’s financial health, and the process of becoming “more stuck” as a result of the option you chose to solve your short-term problem yourself, instead of asking for help or not think of you. had other options: it represents a payday loan.

The “solution” now becomes a bigger problem to solve than the initial problem.

This is where the analogy ends, as mud patches don’t have business models designed to keep you stuck, and payday lenders do. It’s in getting people stuck that the real profit is where the interest rate ultimately mounts to 391% in Indiana. And you really have to find a solution to your solution.

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That’s why I often refer to the payday industry as one of the most subsidized markets out there, because government and nonprofit resources are often required to rescue people from the disasters that payday loans cause. of payday.

But what if it didn’t have to be this way?

One way forward is policy change. For now, the burden falls largely on Congress, and its legislative reach will help make the Fair Credit for Veterans and Consumers Act – to cap all payday loans at 36 percent – ​​a reality. You can also ask your state legislators to impose a state cap of 36 percent. But until the legislation passes, and even once it passes, many Indianans will still need a more responsible way to borrow.

So what if there was another route?

What if the majority of the 88 percent of Hoosier voters surveyed who said they would like to see Indiana have a 36 percent payday rate cap, that they are in a position to provide another way, set a path to an alternative solution for your employees and co-workers?

The impact, to stress my analogy, would be far-reaching for Hoosier families who don’t have the resources to weather a financial shock.

A specific “bypass”, previously available in only 23 counties, has recently become available in Indiana. If you are a business owner, or a human resources representative, or just someone willing to talk to your boss about making a financially sustainable option available to those in your workplace, the solution I present to you is the Center program. Community Loan.

It is an affordable, employer-based small dollar loan program. So what’s the catch?

Well, as hard as it is to believe, there really isn’t one. For companies participating in the program, the CLC program is provided as an employee benefit at no cost to the employer. Employers literally only need to: 1) confirm employment when applying for a loan and 2) set up payroll deduction according to the employee’s pay plan. By doing so, they instantly gain employees who are less stressed and more present at their jobs.

Available through nonprofits, this affordable 12-month loan is designed to get or keep people out of debt rather than trap them in it. (CLC loans can be used to pay off payday loans.) The reason is simple: the nonprofit providers who offer this program would rather put their resources toward improving a family’s economic trajectory than bailing them out from the earthquake that comes with a payday loan.

Just consider how you could take this alternative to your workplace – and, indeed, help resolve a colleague’s short-term financial doldrums in a way that makes it manageable and gets people out of the mess without getting stuck.

Jessica Love is Executive Director of Prosperity Indiana, a statewide membership organization for individuals and organizations that strengthen Hoosier communities. She wrote this commentary for the Indiana Capital Chronicle, a sister site to the Pennsylvania Capital-Star, where it first appeared.

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