As ministers in communities of significant financial need, we are deeply troubled that Florida lawmakers approved a bill that payday lenders are pushing to legalize a new type of loan with an interest rate over 200 percent — in addition to the high-cost loans they already make in our state.
We urge Gov. Rick Scott to veto the bill and show that he stands with the people of Florida, and not with those who take advantage of struggling families. We work with families from neighborhoods in the heart of the city, communities that are already stressed. Payday lenders set up shop there and catch people in a cycle of debt they have a hard time escaping.
We have seen firsthand the families that have been caught in this trap and who have lost a great deal of money that they simply don’t have to spare. Certainly, Florida can do better for these families. Senate Bill 920 and House Bill 857 would allow payday lenders to make larger loans of $1,000 with terms of 60 days to 90 days. This simply creates a deeper debt trap at interest rates that amount to usury.
Payday lenders and their supporters in the Legislature asked us to ignore those 200 percent interest rates, saying they don’t matter because the loans are short term. But in reality, payday lending creates a long-term cycle of debt, and the APR shows just how costly they are compared to other forms of credit. A person caught in that cycle of repeat loans week after week, month after month, would often pay back more in fees than they borrowed in the first place. Sometimes they are caught in this trap for years, leaving families in bad financial shape.
Payday lenders have a lot of influence in the Legislature. They have the money to make themselves heard. Their false claims of providing a needed service have convinced lawmakers to keep the system going. But the voices of those most in need go unheard and unheeded. How many families working to make it day-by-day has the resources to go to the Legislature and testify to their struggles as a result of these loans? We’ve seen the few who have made it to Tallahassee to testify ignored in deference to the payday lenders’ lobbyists in the room.
As faith leaders and pastors, we are compelled to speak out and ask the governor to right this wrong. Payday lenders take more than $300 million a year from our communities, money that should be going to pay for food, clothing and shelter. This new product will give payday lenders another tool to let them raise that $300 million even higher. A 200 percent interest rate is usury, and a loan designed to trap people in debt is morally repugnant. We ask Gov. Scott to listen to what the people of this state need, not the payday lenders.
Rev. Dr. Gabriel Salguero is president of the National Latino Evangelical Coalition and pastor of Calvario City Church in Orlando.