Christian Financial Services Fights Against Predatory Lenders

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CFS forms new non-profit with the Community Loan Center of the Rio Grande to fight against predatory lenders.

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As a credit counseling and debt management agency, Christian Financial Services (CFS) sees many clients from all walks of life. The homeless, veterans, active military, the disabled, home buyers, and the public at large are all educated by their ministry. A growing problem CFS is finding in counseling is the trend of predatory lenders making predatory loans to clients.

By definition, a predatory loan is a non-traditional personal loan that is to be repaid on the next pay period (hence the term "payday loan"), and is only underwritten by a signature and proof of income. These loans come with high interest and fees, so that a borrower often has to pay far more than the amount borrowed in a short amount of time. If the full balance cannot be repaid, the loan is refinanced, and the borrower makes a payment that only covers the interest. At that point, the lender is in control as the borrower cannot pay off the loan and continues to owe the full amount, plus penalties.

Due to the contractual nature of these loans, no help is available to borrowers who have taken them out. Many times, in order to get more money, borrowers put up a car as collateral, and if they don't pay, the car is repossessed, making a bad situation worse. These loans create a "poverty trap;" people with no money borrow, then have a payment, which means they have to borrow again, which means another payment, and so on. Last year, payday loan companies made over 4 billion dollars in Texas off of people who were already experiencing financial hardship.

Fighting payday loans has been an issue that has long been unresolved in Texas, and as a result, the situation deteriorates for low-income citizens. Legislation was presented in the Texas Congress, only to be shut down by payday loan lobbyists. San Antonio has made them illegal within city limits, but lenders are circumventing these laws by formally making the loans in nearby cities, the result of which being virtually no slowdown in the volume of lending.

Fortunately, a new business model has been created that provides a sliver of hope and relief for those who find themselves under predatory lending practices. The Community Loan Center of the Rio Grande Valley has begun to offer an alternative loan through employers as a free fringe benefit to employees that allows them to borrow up to $1,000 in a time of need, with a repayment time of 12 months, far lower interest, and payments made through paycheck deduction.

In order to join in the fight, Christian Financial Services has been providing the education, expertise and support needed to form a new non-profit being created in partnership with CLC Rio Grande. This new entity is called the Community Loan Center of San Antonio. Christian Financial's non-profit knowledge is being used to help this new non-profit lender get started in the River City, meaning relief will soon be coming to San Antonio's population in the form of a lending alternative that is affordable and safe.

This marks the beginning of the potential for real change in the predatory lending market. Working together, community-oriented agencies like Christian Financial Services are paving the way for a brighter future for those in low-income and unexpected expense situations.

To participate, volunteer, learn more or make a tax-deductible donation, call Christian Financial Services at (210) 341-5911 or email at cfsappts(at)gmail(dot)com. Christian Financial is also available on the web at http://www.christianfinancialservicestx.com, and on Facebook at http://www.facebook.com/christianfinancialservices.

About Christian Financial Services:
Christian Financial Services is a 501(c)3 non-profit organization. They are dedicated to educating everyone about God's biblical principles for finances and providing services to help their clients spend money wisely and become debt free. The road to financial freedom starts with a face-to-face counseling session with one of their Burkett-trained counselors. Using the industry recognized Debt Management Program and a continual focus on God’s will, Christian Financial Services helps individuals meet their own unique financial needs. For more information, visit their website at http://christianfinancialservicestx.com/.

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Brandon Curry
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