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Predatory lending on the rise, presents issues for Denton
Daniel Bissell / Staff Writer
During the ongoing financial crisis, predatory lending practices offering quick paydays and car loans have been increasing in volume.
Denton City Councilman Kevin Roden said he has noticed a rise in the number of these businesses popping up around Denton. He said disadvantaged demographics are the most vulnerable to such practices.
“Predatory companies target the poor, the elderly, and illegal residents,” he said.
Roden said certain lending companies offer quick cash alternatives for people who don’t qualify for bank loans.
“Predatory lenders advertise a quick and easy way out of a bind,” Roden said. “So for someone who finds themselves in a desperate financial situation, these companies can look pretty appealing.”
Roden said many faith-based and nonprofit organizations in the area have seen an increase in people turning to them for financial help.
“Poor people are disproportionately affected by these companies,” Roden said. “They acquire loans they can’t pay off, and are hit with massive fees as a result. These companies help to continue the cycle of poverty, and that is a problem that needs to be addressed.”
Four cities in Texas – Austin, Dallas, El Paso, and San Antonio – have enacted legislation to curb the spread of predatory lending companies.
“We’re currently reviewing our options in Denton to prevent the further spread of these companies,” Roden said. “We’re using these cities’ legislation as a model to create our own.”
Barksdale English, policy aide for Austin City Councilman Bill Spelman, authored a zoning ordinance limiting where payday and auto title loan businesses can be located, according to the Texas Tribune.
“In Dallas and Austin, we are leading the fight at the local level, because the state has been hindered by the significant lobbying effort that the industry has taken on,” English told the Tribune.
Students are not immune to the damaging effects of predatory lending, either, English said. Student Money Management Center director Paul Goebel said predatory lending practices are banned on campus.
“Several years ago, UNT was one of the first campuses in the state and nation to implement a rather comprehensive restriction on predatory marketing practices, like credit card companies, from occurring on campus,” Goebel said. “Fortunately, a growing number of college and university campuses across the state and nation have followed UNT’s example.”
Goebel said students have resources available on campus if they find themselves in a legal financial situation.
“UNT students are very fortunate to have the Student Legal Services office as an invaluable resource to help them with legal-related issues, concerns, or questions,” Goebel said. “Students feeling that they have fallen victim to predatory lending practices should schedule appointments or take advantage of the SLS walk-in hours.”
He said the center is willing to help students recover from damaging financial situations.
“The [center] is here to help students to address any aspect of their personal financial lives,” Goebel said. “Whether it’s to strategize paying down debt or developing a spending plan for the next semester, the SMMC team is here to help.”
Goebel said people should employ common sense when it comes to acquiring loans. He said to never sign any legal-binding document without thoroughly reading, reviewing, and understanding every sentence in the document.