BY ELAINE KLAASSEN
A payday loan is a small-dollar, short-term loan. One can get a payday loan at places like Ace Cash Express or PayDay America. The loans are marketed as a short-term solution for an emergency. But the loans are also used by people just desperate to pay rent and buy food. The lenders have little regard for whether the borrower is qualified to take on a loan and whether they will be capable of paying it back. Borrowers might need anywhere from $200 to $1,000 to get through the next two weeks. If someone can’t keep up with basic necessities, what’s the likelihood they’ll have enough money in two weeks to pay back a loan? They’ll probably need another loan. Then they pay an exorbitant finance charge and they’re stuck in a payday debt trap, likely for a long time to come. Preying on people in difficult situations with high finance charges is called predatory lending. It’s not illegal, because the lending companies figure out how to get around the regulations, but while not illegal, it is clearly immoral.
Ever since predatory payday lenders moved into the neighborhood, Holy Trinity Lutheran Church, at E. 31st St. and 28th Ave. S., has been concerned for borrowers trapped in a cycle of debt. Over the past three years the church has brainstormed and brainstormed how to help. On April 1, 2015, the nonprofit Exodus Lending opened for business.
Exodus Lending refinances payday loans, and then offers financial counseling and a savings program. Four clients were enrolled in the program on the first day. Director Adam Rao said that, “In our first week of operations, we refinanced over $2,800 in payday debt, saving those clients nearly $12,800 over the next year in finance charges and fees.”
Exodus Lending is the first of its kind in Minnesota. It is funded by individual donations and grants.
If you want to enroll or donate, you can find more information at exoduslending.org or 612-615-0067.
