GreeningFrogtownJulyAug17
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WEALTHIFICATION<br />
A Path Out of the Payday Lending Trap<br />
Exodus Lending buys out loans, cuts interest costs to zero<br />
David Bayliss had a problem that will<br />
seem all too familiar to some<br />
Frogtowners. He had a decent job that<br />
paid the bills. Then he got laid off in<br />
November, 201 4.<br />
Unemployment payments lasted for six<br />
months. While it was a help, the amount<br />
didn’t match his previous income. He was<br />
falling behind on his bills, which were<br />
considerable. He had to cover rent, a car<br />
payment, support for his former wife and<br />
children, plus food and all the rest of life’s<br />
incidentals.<br />
He got behind on rent, behind on car<br />
payments, and was paying utilities<br />
intermittently. When he finally found<br />
another job in June of 201 5, his problems<br />
didn’t really end. His pay wasn’t enough<br />
to allow him to stay current on his bills,<br />
plus catch up with all that he owed.<br />
Bayliss’s next move was to do what 1 2<br />
million Americans do every year. He took<br />
out a payday loan.<br />
He knew it wasn’t the best move. But it<br />
was the only one he felt he had left. “You<br />
take out a payday loan because you<br />
absolutely need it,” he said. “You’re at a<br />
David Bayliss escaped the payday lending trap with help from Exodus Lending.<br />
point where you’re willing to sign up for<br />
anything. It’s the step right before being<br />
out on the street.”<br />
To get a payday loan, as too many<br />
Frogtown residents may already know,<br />
you need to have a job and a bank<br />
account. The loan limit is $350 at some<br />
shops, and $500 or more at others. You’ve<br />
got to pay the amount back in full on your<br />
next payday, plus fees and interest. On a<br />
$500 loan, the fees and interest can run to<br />
more than $33. If this were a conventional<br />
loan, the annual percentage rate (APR)<br />
would be 1 63 percent. But fees for<br />
smaller amounts are an even worse deal.<br />
Borrow just $200 and the annual<br />
percentage rate with interest and fees is<br />
365 percent.<br />
Bayliss took out his first payday loan via<br />
an online operation in August, 201 5.<br />
When it came due he didn’t have the<br />
money to pay it off. He did what many<br />
people do to satisfy his payday loan. He<br />
took out another payday loan to pay off<br />
the first one. Again he paid the fees and<br />
interest that added up, in his case, to an<br />
APR of 578 percent. For Bayliss, history<br />
repeated itself every two weeks, when his<br />
loan came due and he paid fees and<br />
interest to get another loan.<br />
He tried going to his bank for a small<br />
loan to close the gap, but quickly got an<br />
education in current banking practice.<br />
Most banks aren’t set up to provide small<br />
loans for living expenses. If you’ve had a<br />
bankruptcy in the past 1 0 years, which<br />
was the case for Bayliss, you’re way out<br />
of luck. The bank officer was<br />
sympathetic, but didn’t have anything to<br />
offer. She suggested that Bayliss hunt<br />
around for a non-profit that might be able<br />
to help.<br />
— Continued, Page 11<br />
PAGE 2 JULY/AUGUST / 2017<br />
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