‘That money is not easy money’: Loan, cash advances warning in Mid-South

MEMPHIS, Tenn. — Get cash today!

You see the signs all over Memphis for cash advances and payday loans.

It’s tempting to cash in now and pay it back later.

Investigating the hidden costs that come along with them.

”In a black neighborhood, every corner a title loan, every corner a liquor store,” said Evelyn Peters, a customer.

Evelyn Peters saw the signs and bought in.

Peters said she only borrowed $200, but when she couldn’t pay it back in time, that transaction kicked off a vicious cycle of debt.

“Once you get it, guess what you’re in trouble. They keep charging you,” said Peters.

She learned the hard way, about high-interest, short-term loans.

“That money is money that you go and get when you down and out. And ain’t got nowhere else to go,” said Peters.

Payday loans are officially called deferred presentment in Tennessee.

Here’s how it works:

  • You write the lender a post-dated check usually two weeks in advance, but up to one month.
  • In return, the lender gives you cash and caches your check on that date.

Sounds simple, but Peters will tell you.

”That money is not easy money,” said Peters.

That’s because of the fees involved.

In Tennessee, lenders can charge up to 15% of the face value of the check.

For a $500 check, you get back $425 and they keep $75 for a two-week loan.

That’s an annual percentage rate of 460%.

The APR on a credit card is usually between 15 and 30%.

But most payday lenders will take people with bad credit, and few other options.

“These predatory lenders do not want to let you loose, they don’t want you to pay your bill in full. They want to take it and roll it over,” said G.A. Hardaway, TN Rep.

Tennessee Representative G.A., Hardaway wants payday lending and other predatory loans to be abolished in Tennessee as 14 other states have done.

”I’m an optimist. I believe at some point, what is right, what is morally right, will eventually conquer all,” said Hardaway.

Consumer bills ensure Debthammer ranked Memphis as having the worst payday lending problem in the country in 2021, due to the huge number of payday lenders here, the poverty rate, and the number of federal complaints.

Hardaway believes these high-interest loans prey on the poor, bouncing them from loan to loan, struggling to ever catch up. Peters says she knows firsthand.

Debthammer surveyed more than 250 people who’d taken payday loans.

80% said they were financially worse off than before they took the loan.

And 93% said they regretted it,

FOX13 reached out to lobbyists in favor of payday loans for an interview, but has not heard back.