Recently the community on Independence Avenue in Kansas City came out in opposition to the payday/title loan company rebuilding after the fire next door. Most people who have not had an experience with payday or title loans may not appreciate the passion of their opposition. Why should a community be opposed to a company that was providing a service to the area?

Let me give you one example that demonstrates such a service. As a volunteer at Community Services League I came in contact with a woman who had a title loan from a company in Independence. She borrowed $2,600 against her car so she could pay the closing cost on a house. She had been paying the title company $571.36 a month from her $784 monthly disability income. She was trying to make loan payments by selling her personal property each month, but she had run out of things to sell and was getting behind on her utilities. When I looked at her amortization schedule I realized that for the first four months all of her payments were going toward interest, none of her payments were for the principal. The interest rate was 232.9 percent APR. The total amount of the $2,600 loan was going to cost her $11,693 on a two-year term.

After I had an intensive discussion with the title loan company, they agreed to settle with her, so she paid only a little more than $1,000 interest on the loan she held for less than a year.

The settlement worked for her, but unfortunately a settlement is not offered to most people because they do not have an advocate to assist them. From state records we know that last year there were 65,424 payday loans in Independence, because most people who take out a loan take out multiple loans.

I give presentations about payday loans to churches and organizations. The one question that usually comes up is why is this predatory practice legal? Missouri law does not cap the interest rate payday/title loan companies can charge. The interest rate on a title loan is low in comparison with a payday loan interest rate, which on the average is 455 percent APR.

Our Missouri legislators have refused to change the law, mainly because of the intense industry lobby and financial contributions made to legislators. Some of our legislators in Independence and Lee’s Summit have received sizable contributions from the payday loan industry. Some of our local representatives who have accepted payday loan contributions are running for higher office and are in leadership positions.

During this Christmas season people generously put money in the Salvation Army bucket and make contributions to Community Services League so children can have toys. Those are welcome contributions. But at the same time we need to understand why some people are trapped in poverty and how we can help beyond simple charity. Here are a few suggestions:

• Learn more about the payday loan industry in Independence. I can make a presentation at your church or organization.

• Contact your local senator or representative, particularly those running for office, and inquire of their position on payday loans and let them know your position.

• Contact a city council or planning commission member and oppose the opening of any new payday loan businesses. (One business just closed, which by city ordinance leaves an opening for another one to open).

• Learn about the credit union housed at the Community Services League, which provides low interest loans to low income people to prevent them from being caught in the payday loan debt trap.

Contact Garland Land at