The Community Development Advocates of Detroit is hosting a community conversation on the impact of payday loans on Detroit residents on Tuesday night.
Ruth Johnson is Director of Public Policy at Community Development Advocates of Detroit. She hopes the event will promote financial literacy among residents and bring attention to an issue that she says has become a major issue for Michigan.
“These loans have drained over half a billion dollars over the past five years from our state. In 2016, these loans cost Michigan citizens over ninety-four million dollars, “she said.” And what is truly tragic is that payday lenders are targeting the most vulnerable. at a very desperate time. They continue to cycle and cycle by renewing or getting new payday loans to pay off previous loans. ”
Sherry Gay-Dagnogo is a representative from the State of Detroit. She says payday loan companies target communities of color and communities living in poverty, citing a 2018 Center for Responsible Lending. to study.
“These payday lending institutions are mainly locating in communities of color and where there is a great need,” she said. loans as a way to fill some of the gaps in their finances.
She says these loans have the opposite effect.
“The point is, it exacerbates these discrepancies and continues to put more of a burden on consumers as they continue to work,” she said. “Then the salary is not what they need to meet their financial needs. They will find that they still find themselves in that same cycle of poverty.
Johnson and Gay-Dagnogo indicate regulation is a potential solution.
“We want people to know House Bill 4251 that would put a 36% cap on interest rates, ”Johnson says. “Sixteen other states and the District of Columbia have set this 36% cap. We want to join with those states in imposing reasonable restrictions to protect consumers. “
Gay-Dagnogo refers to the same bill saying: “we have to look at the legislation, as my colleague representing [Bill] Sowerby said, this would cap those fees and reduce the ability of payday loans to continue to siphon money from urban communities through these fees. ”
The event is scheduled to take place tonight at the Central Detroit Christian Community Development Corporation at 1550 Taylor Street in Detroit. Doors open at 6 p.m.