Senator Eliot Shapleigh - El Paso, Texas

The Center for Responsible Lending has released an analysis of payday lending industry data, which estimates that:

* Active-duty military personnel are 3 times more likely than civilians to have taken out a payday loan

* Predatory payday lending costs military families over $80 million in abusive fees every year.

The predatory lending problem is common knowledge for military members, their commanders, and anyone who has seen the payday cash advance centers popping up around bases.

Payday loans, sometimes called deferred deposit transactions, are loans of around $300 to $500, secured
by a signed, postdated personal check. They are
marketed as cash advances on the borrower’s next
paycheck to cover an emergency need. But payday
lenders make the overwhelming majority of their loans
to borrowers who cannot pay off their loans in full by payday.

Instead of offering a product that enables borrowers to
escape emergencies, payday lenders flip these borrowers
— renewing their loans repeatedly for high fees without extending further credit. The trapped borrowers frequently end up paying back many times the amount of the original loan at annual interest rates that are typically 400 percent or higher.

Military families are a natural target for this scheme. Most are young and often financially inexperienced, and, since they live on or near military bases, lenders can easily locate close to these families. Their steady government-issued paycheck becomes a reliable source of fees for the payday lenders. The lenders can be confident military borrowers will not default on these high-rate loans because members of the armed services face serious consequences for not repaying debt. Finally, most military personnel do not make enough money to get ahead — or
out of the debt trap.

To read the entire report, click here.

To read Senator Shapleigh's S.B. 1479, click here.