More Christians turning to predatory payday loans that some find helpful: study
While more than 75% of self-identified Christians in 27 states with no meaningful regulation of payday loans believe it's a sin to lend money in a way that harms the borrower financially, more than a third of them say they have obtained such loans, which an increasing number of borrowers also find helpful, a new Lifeway research study shows.
While payday loans are usually presented as “quick help for an unexpected emergency,” according to the National Association of Consumer Advocates, these “short-term, high-interest loans, usually for small amounts ($500 or less), that are due your next pay day” are typically predatory.
In their online survey of 1,000 Americans in 27 states conducted Feb. 22-27, and sponsored by Faith for Just Lending, Lifeway research found that more than 3 in 4 see lending as harmful to borrowers and sinful, even though 1 in 3 respondents have taken a payday loan before. And even though a growing share of Christians see these predatory loans as helpful, most support government and church intervention in an industry predicted to grow to $42.6 billion globally by 2028.
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“The proliferation of retail payday lending establishments has increased the first-hand knowledge many Christians have of these financial institutions,” Scott McConnell, executive director of Lifeway Research, said in a statement. “The majority of Christians in states with few regulations on payday lending want more regulations that protect borrowers.”
Among the states surveyed in the study are: Alabama, Alaska, California, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Wisconsin, and Wyoming.
The Department of Financial Services in New York state, where payday loans are illegal, notes that “payday loans are designed to trap borrowers in debt.”
“Due to the short term, most borrowers cannot afford to both repay the loan and pay their other important expenses,” the agency explains while highlighting several other reasons payday loans are illegal in the state, such as annual percentage rates of 400% or higher.
Despite warnings from states like New York, however, when asked to choose which words apply to payday loans, some 37% of respondents said payday loans are helpful, more than doubling the share of those who held this sentiment in 2016 when a similar survey was done. Only 16% of respondents described payday loans as helpful at that time.
“Short-term financing is a real need for many Americans, so you expect to see a growing number of customers who appreciate the payday lending service. Yet, many describe payday loans with language that sounds more like warnings than endorsements,” McConnell said.
Even though Christians in states most vulnerable to the predation of payday lenders would love their churches to offer some kind of help with the lending practice, McConnell says most churches have said nothing.
“Most churches are silent on payday loans at times when Christians desire advice and emergency help,” he explained.
Faith for Just Lending is a coalition of faith-based institutions working to end predatory payday lending, is not.
The Faith for Just Lending steering committee includes Catholic Charities USA, Center for Public Justice, Cooperative Baptist Fellowship, Ecumenical Poverty Initiative, Ethics & Religious Liberty Commission of the Southern Baptist Convention, Faith in Action (formerly PICO National Network), National Association of Evangelicals, National Baptist Convention USA, National Latino Evangelical Coalition, The Episcopal Church, United Church of Christ, and United States Conference of Catholic Bishops.
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