Payday loans are short term loans at extreme interest rates that target the population that can least afford the loan. A typical payday loan can have interest rates as high as 300 to 500% a year. While this may not be against the laws of man it is certainly against the laws of God. Both the Koran and the Holy Bible speak out against usury or unreasonable high interest. Here are a few Bible quotes:

25 ” If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest.

26 “If you ever take your neighbor’s garment as a pledge, you shall return it to him before the sun goes down.

27 “For that is his only covering, it is his garment for his skin. What will he sleep in? And it will be that when he cries to Me, I will hear, for I am gracious. (Exodus 22:25-27)

10 “I also, with my brethren and my servants, am lending them money and grain. Please, let us stop this usury!

11 “Restore now to them, even this day, their lands, their vineyards, their olive groves, and their houses, also a hundredth of the money and the grain, the new wine and the oil, that you have charged them.” (Nehemiah 5:10,11)

It is clear where the Lord stands on usury and therefore, payday lending. It is unfortunate the laws of man are not as clear.

People go to payday lenders when they are short on cash or unable to pay a bill which is usually before the will receive their next pay check. Unfortunately, people that live paycheck to paycheck will now have less money starting the next cycle and will need yet another payday loan or extend their original for a fee. Often times the victims of the payday loans end up paying renewal fees and interests week after week just to service your debt. This is called the cycle of debt. The debtor can end up paying many times the cost of the original loan and end up falling behind in more bills than the one they originally borrowed for.

So why are payday loans suddenly popular when 30 years ago none existed. Very simply, lobbyists. Lobbyists, representing the lobbied interest, convinced weak minded politicians that society would be better off charging the working poor high interest rates for loans. Of course, it was not the single mother working two jobs that went to her congressman and said please take more money out of my pocket. It was the lobbyist representing some of the largest banking industries in America looking for new ways to increase profit at the expense of our society.

What needs to be done? Nothing new needs to be done. We just need to go back to before states got rid of their usury rates. Setting a maximum interest rate of no more than 50% or 45% above the prime interest rate. While still high would help stop the cycle of debt that many people find themselves in.

Author Bio: If you would like to learn more, you can listen to the podcast Money and Politics or other shows mixing religion and politics by Rev. F. Joseph . Other quality podcast are available at http://septicradio.com.

Category: Finances
Keywords: payday loans, Money and Politics, religion and politics