by Jill Ragar Esfeld
OLATHE — John Lanham has an older model Chevy Silverado that is his lifeblood; it is his only transportation to and from work.
A few years ago, he also had a need for financial help, but his credit history made a bank loan impossible.
Driving to work one day, he saw what he thought was a solution to his problem.
“I saw this place that advertised, ‘Money, cash money,’” he said. “I stopped in and they were so eager to lend me money.”
Lanham signed an agreement with Cash-2-Go, a title-loan company. He put his truck up as collateral and walked out with $2,000.
“It was very brisk and quick,” he said. “They didn’t explain anything.”
He immediately began paying back the loan, consistently making payments of $160 to $200 a month for more than a year.
“I was kind of thinking, ‘I’m making headway paying on this,’” he said. “I added all the receipts up and I had paid back the amount they lent me.”
Lanham figured he was just about done with Cash-2-Go. Life was good.
Then he got a notice threatening to repossess his truck.
“I went down and talked to them,” he said. “And then, they made it clear. I guess it was in the paperwork initially, but they slipped it past me.”
Lanham discovered he was loaned the money at more than a 300% interest rate.
“They told me I needed to be paying $380 a month just for interest,” he said. “They told me the amount that I now owed was $3,800.”
Cash-2-Go, not so eager to help anymore, told Lanham if he didn’t pay that amount, he would lose his truck.
“It totally rocked me,” he said. “I almost fell out of my chair. I said, ‘You have got to be kidding me! $3,800?’
“And I drove away stunned.”
Welcome to the world of predatory lending.
Preying on the poor
Lanham is not alone. Catholic Charities workers see this situation all the time in the people who come to them in need of emergency assistance.
“It’s legal here [in Kansas],” said Good Shepherd parishioner Amelia Reyes, senior director of asset development at Catholic Charities of Northeast Kansas. “We have a lot of predatory lenders in this area.”
If you read the fine print, payday and title-loan contracts state clearly that they have an average annual percentage rate of 325%.
“But I think because of the manner in which it is presented to individuals,” said Reyes, “they don’t realize how much this is going to cost them if they can’t pay it back in a few weeks.
“We had an elderly woman in Emporia,” she said, “who had been diligently paying her loan off for two years, and she had paid over $8,000 on a $500 loan.”
Most individuals preyed on by these lenders have no savings and find themselves behind on their bills, usually because of a medical crisis.
“They go to the hospital,” explained Reyes. “They lose out on salary, and then they can’t pay their rent. They take out a loan because they’re trying to catch up.
“The population we see is pretty diverse. The majority of the people would be considered living in poverty.”
Recognizing predatory loans as a major factor in creating financial crises for individuals and families, Catholic Charities decided to address the problem as part of its programming.
Three years ago, it launched the Kansas Loan Pool Project (KLPP).
A hand up
The KLPP is designed to help eliminate high-interest title or payday loans by issuing participants a new, low-interest loan.
Catholic Charities advertises the program and screens applicants but has a banking partner that administers the loan.
“By refinancing through a banking institution,” said Reyes, “we are able to help them build credit.”
And there’s an end point in sight.
“Their payments are fixed,” she continued. “Most individuals enrolled in our program stay in for 12 months. That’s about the average loan time.”
In addition to being issued a new loan, each participant is enrolled in a financial education course to help develop a long-term financial plan and budget.
They are also assigned a Catholic Charities case manager specialist to provide ongoing support.
“If we were just giving out loans,” said Reyes, “we’d be a bank. That’s not the point of the program.
“It’s to invoke change and education in how to manage money so you can have some savings and not end up in this place again.”
The KLPP has become such a sought-after program that Catholic Charities has set up a hotline people call to leave basic information. Staff members then screen for applicants.
“In any given year,” said Reyes, “we see about 120 total individuals we’re serving. And within that year, we’ll administer about 70 new loans.”
Since KLPP began, 115 clients have completed the program and successfully paid back their loans.
A changed life
When faced with the realization that he was about to lose his truck, Lanham did what most of us would do.
He turned to God.
“I fell to my knees and I said, ‘Lord I don’t know what to do here. I made a mistake,’” he said.
Lanham asked a friend to pray with him and, as providence would have it, the friend happened to know about the KLPP.
He told Lanham to go to Catholic Charities of Northeast Kansas and ask for Reyes and KLPP supervisor Sasheen Cutchlow.
“I went down,” he said, “and I talked to Sasheen and Amelia. I’ve got tears right now just thinking about it.”
Lanham agreed to the terms of the KLPP and went through the bank to get approved.
The day his truck was scheduled to be repossessed, he met Cutchlow at Cash-2-Go to pay off his loan.
“She had tears in her eyes then, too,” he said.
Lanham began paying on his new loan, as he was participating in the KLPP program.
It changed his life.
“I learned things about budgeting and checking accounts and these predatory loan places,” he said. “I learned how to get my credit score up.
“And then I got married, and Amelia said, ‘We’ve got another program.’”
A manifestation of the word
During the process of recovering from his loan crisis, Lanham met Donna, whom he sees as another gift from God.
“My wife is really good with financing,” he said. “That was another blessing from the Lord.
“I let go and let her budget.”
At the suggestion of Reyes, the two enrolled in the Family Financial Transformation program (FFT) also offered by Catholic Charities.
“After he was in KLPP,” said Reyes, “John really wanted to concentrate on his financial growth and figuring out his finances better.
“The FFT really complements the KLPP.”
The Lanhams began applying what they learned to their household with winning results.
“We completely paid off the loan in February,” said Lanham. “And we’ve got a savings account building up now.”
Lanham sees his experience with the KLPP as a reflection of his favorite Bible passage — the story of Peter confronting a cripple begging at the temple gate.
When asked for money, Peter replies, “Silver and gold I do not have, but what I have I give you: in the name of Jesus Christ the Nazarene — walk” (Acts 3:6).
“And the guy got up,” said Lanham. “It was a miraculous healing.
“It didn’t say anything about the guy after that. But what I think is that he no longer had to beg.
“I see the manifestation of that in what happened with my truck and the program.”
“It’s not just [Catholic Charities] paying a debt and then you pay [them] back,” he continued. “It’s about helping you walk.
“And now I’m dancing.”