TEMPLE — Because Chris Hill needed quick cash to help make ends meet, he took out a loan several months ago. Now he doesn’t even have enough money to buy food — thanks to his lender.
Hill has become yet another victim of payday lenders — companies that promise fast loans, but with a big price tag.
Typically, payday lenders will dangle several lures to draw in people who need money now: The loan can be approved in minutes, is deposited directly into the recipient’s bank account and is available even to people with bad credit.
However, Hill has discovered the downside of these loans, which includes high fees and interest rates — and more.
“It’s been a nightmare,” he said.
The company Hill used, Progressive Debt Relief, charged him a $25 fee for every $100 he borrowed. When Hill fell behind on monthly payments, the company, which required Hill to submit his bank account number before he could get any money, was able to draw the entire amount of the loan from Hill’s account.
“They cleaned me out,” he said.
Hill, a retired USDA worker who suffers from advanced muscular dystrophy and is wheelchair bound, lives in government-subsidized housing. At age 57, he struggles to meet his basic needs.
“I just bought him some food,” community activist Sue Hamby said.
Hill took out the loan because he needed money, but now he needs more because of the loan. “You get caught in a cycle. Once you get behind, it’s impossible to get out.”
The company has been calling him and pressuring him to take out another loan, Hill said.
Rucker Preston, director of Helping Hands, a Belton charity, said the organization offers programs that teach people about the pitfalls of payday loans.
The charity helps working class people who are caught up in the loans and have lost their homes and cars to companies that charge up to a 500 percent interest rate, he said.
The loan companies proliferate in Texas because state statutes regulating the companies are lax. These companies also have plenty of interest groups lobbying for them. In Washington, D.C., and some states in the Northeast, payday loans are illegal, but in states such as Texas and Utah, the loan companies are “wide open,” he said.
Because payday loan companies operate under state laws, cities that try to regulate them are hobbled, but not helpless. Cities can make opening a new company more difficult by requiring such businesses to obtain special permits.
The Temple CARE Leadership Network has scheduled a meeting at 7:30 a.m. Thursday to inform the community about payday lenders. Hamby, who helped organize the meeting, said she wants to find a way to shut the companies down. “I’m 76, and I don’t intend to go to my grave until I’m done with them.”