Six years ago, Sherry Amos Prater entered her bank to withdraw $25.
“I was told, ‘Mrs. Amos, you don’t have cash,’” the teller told the Vestavia Hills resident.
Prater’s bank balance dwindled to zero because her then-husband took out payday loans without her knowledge, wiping out her family’s savings. She became homeless and was taken in by a shelter for women and their children while working five jobs to stay afloat.
“We lost our home, we lost our savings. The one thing I didn’t lose was my faith, my faith to persevere,” she told a discussion on payday lending arranged by churches, social service organizations and two Republican state representatives who are pushing for a bill that would extend the due date to pay back such loans from 14 to 30 days and slash their APRs. “I lost everything, but I gained so much, and that’s to give back to this community and give back in a way that’s so much better than I ever dreamed. Yes, I lost, but I gained new people, I gained friends, I gained support and my children also gained a strong lesson in life: You may lose everything and that concrete ground may be hard but if you only look up, there’s light.”
State Rep. Danny Garrett, R-Trussville, the bill’s main sponsor, said the opposition to payday loans runs across political and religious lines.
“This is an issue that’s united all faith groups, it has united Democrats, Republicans, liberals and conservatives,” Garrett told the forum at Canterbury United Methodist Church in Mountain Brook. “We have a really strong coalition. If we can get this to the floor I think we can get this to pass.”
The average payday loan in Alabama has an APR of more than 300 percent, with the riskiest borrowers paying 456 percent. Garrett’s bill cuts the interest rate to 220 percent – which elicited groans from the crowd; the lawmaker said he’d like to see the payday loan industry eliminated but that his bill is a first step.
“It’s a step, and the groans I heard – that’s what happens is people don’t think it’ll go far enough [but] we have to do something,” he said.
State Rep. David Faulkner, R-Mountain Brook, one of the bill’s co-sponsors, said he was optimistic about the chances of it succeeding, saying that lawmakers had to weigh protecting payday loan borrowers with giving those struggling to make ends meet access to loans that they could not get at a bank or credit union.
“This is a balance between consumer protection and free market,” Faulkner said. “What we have now has loopholes in it and it has gone too far and we need to rein it in.”