How PayDay Lenders Prey on the Vulnerable


Maria Cervantes knew of the pitfalls of payday lending when she took out her first loan. The hardworking mother of three found herself in need of a new tire for her car, but she didn’t have the money to buy it. Maria found herself up against a wall and went to a payday lender because she knew she could get access to cash quickly. After all, if she couldn’t get a new tire, she couldn’t get to work, and if she couldn’t work, she couldn’t provide for her family. Maria felt she had no choice. She needed to borrow $300, and the lenders were more than happy to give it to her.

That was five years ago. Today Maria owes more than $2,000 and is still struggling to pay that initial loan back.

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As has happened to so many others in her position, Maria fell victim to the vicious payday lender debt trap, which has resulted in thousands of dollars in fees, negative credit reporting, and harassment. Unable to pay back the initial loan upon her payday, she was forced to renew it plus pay exorbitant fees. To pay that first loan back, she had to take out another loan from a different provider. Eventually, Maria had three loans out and was paying $45 for each every two weeks, or $270 a month.

“Every time that I thought I was going to pay off the $300 loan, something always happened, so I found myself in a cycle. I regret ever taking the $300 loan.” said Maria in a testimonial.

With her credit in tatters, Maria reached out to an NCLR Affiliate, Montebello Housing Development Corporation (MHDC), for help. Working with MHDC, she has begun eliminating her debt and reestablishing her credit, a process that could take up to two years. She is also working with MHDC to pay off her credit cards one at a time. Maria knows she has a long road ahead of her, but with investment and education, she is putting herself on the path to recovery and warning others of the dangers of payday lending along the way.

“The only good thing this experience has given me is the chance to share my experience with those who are thinking about payday loans or those who want to save for a home,” said Maria.

Unfortunately, Maria’s story is not uncommon, and without regulations in place to rein in payday lenders, more and more low-income communities will fall prey to shady lending practices. That’s why we support the proposed Consumer Finance Protection Bureau rule to reform payday lending. Join us in putting an end to predatory lending so that Maria and millions others like her can share in the American Dream.

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