Military deserves protection from loan sharks before, after serving their country
CHICAGO— As our nation marks this day in honor of those who have served the country, Woodstock Institute calls on the Illinois Congressional delegation to follow the lead of the Department of Defense and put action behind the platitudes, honoring our veterans by reining in abusive payday lending.
Payday lenders are the modern day equivalent of loan sharks, aggressively marketing unaffordable loans as a way to meet a one-time need. In truth, payday lenders know that borrowers cannot both repay the loan and cover their living expenses. To do so, they will need another loan, which requires payment of another fee. This is the payday loan debt trap, where interest rates average 400 percent. The vicious cycle of debt is not a side effect of payday lending—it is the business model of payday lending. Three-quarters of payday loan fees come from borrowers with 10 or more loans per year.
“Too many veterans are living in poverty and desperation—the exact profile of vulnerable consumers that payday lenders target,” said Dory Rand, president of Woodstock Institute. “A loan that traps veterans in an endless cycle of debt can be the final push over the edge of despair. Our veterans deserve better.”