Truth in Payday Lending: Ana Maria’s Story
Editor’s Note: This post was originally published on the National Council of La Raza’s blog on May 6 as part of their blog series, “Truth in Payday Lending: Stories from Latino Borrowers.” NCLR also has a new post on Google’s announcement yesterday that it will ban ads featuring payday lenders.
We all run into problems paying our bills every now and then. Some of us can fill the gap with loans from family or friends. But for many Latinos, especially those with limited access to financial products or services like banks and credit cards, payday lenders are often the institutions they turn to in times of need. Such lenders engage in underhanded practices that have bilked millions from unsuspecting customers across the country.
One such customer was Ana Maria Sosa. In need of a small $200 loan to pay her monthly gas and electric bill, Sosa visited a local CheckSmart in her hometown of Lorain, Ohio.
Sosa was given a month to pay back the initial loan. As you can probably guess if you’ve been following this series, she has faced much difficulty in keeping up with payments to pay it back. In fact, she had to renew her loan six more times, shelling out $60 for every renewal.
Since then, Sosa has struggled to free herself from the debt trap that countless other payday borrowers have found themselves in.
“I feel like it’s a vicious circle I can’t get out of,” said Sosa. “It’s causing me stress, and I can’t catch up on any other bills.”
When we talked to Sosa, she also mentioned that because of her trouble keeping up with all of her monthly obligations in addition to her payday debt, a vital service that millions use every day had been cut off—her Internet connection.
Unfortunately, Sosa has learned the hard way about the pitfalls of taking out a payday loan. She says she won’t ever take out another one again. After the harassing phone calls and the hard decisions between paying bills and paying off the payday loans, Sosa says she is done.
However, before she’s completely finished with them, she still has to pay back that initial $200 loan.
We’re fighting hard to help people like Sosa out of this trap and back into good standing through support for a rule the Consumer Financial Protection Bureau is considering that would reign in payday lenders. Sign our petition to show your support for this important rule, and tell Director Rob Cordray that you support a strong rule that protects consumers and curbs underhanded lending practices.