By: Ciark Hicks
August 22, 2012
Hattiesburg has been invaded by high interest lending companies. We are officially under foreign occupation by these small loan, big profit businesses.
Our town has always had small finance lenders. They fill a void for persons who are unable to borrow money from banks or other institutions. Without them, some people would not have access to the money they desperately need for legitimate purposes.
But have you noticed the proliferation of small loan businesses appearing all over town? They have flashy signs proclaiming "Quick Cash," "Title Loans" and "Payday Loans." These companies have swallowed up significant commercial space in our major business corridors. Drive down Hardy Street or Broadway and count the number of new small lenders.
Interest rates nationwide are at all time lows. Yet many of the economically poor and socially disadvantaged have little chance of securing a loan from a traditional lender, such as banks.
Persons targeted by small finance businesses include those who already have poor credit and new young players to the borrowers' market such as college students. Small loan companies now cover almost every block within a mile of the USM campus.
The problem? Small lenders charge exorbitant interest rates on loans in exchange for car titles, paychecks, future legal settlements or anticipated tax refunds. Double digit interest rates are completely legal on these loans. These high rates push the poor or indebted persons into deeper debt, and the more high interest money being loaned around town spells disaster for many Hattiesburg residents.
If the exponential growth of small loan lenders in Hattiesburg does not alarm you, it should. This means the market for high interest loans is growing. If a person does not qualify for traditional lending, numerous studies show they are at grave risk for not paying off a large interest loan.
The solution? Enforce and re-examine the laws on these lenders. Promote individual fiscal responsibility, including saving more and spending less. Educate the public on opportunities to secure loans at reasonable rates. Challenge our political leaders, including the mayor and city council, to hold a town or neighborhood forum on this subject and inform their constituents of the sometimes catastrophic consequences of high interest loans.
These small loan financiers have a powerful lobby, and their presence is not unnoticed in Jackson. While there always will be a need for these businesses, there should be a proper balance in the industry. Quick loans for every block is not a good balance, in my estimation.
If more Hattiesburg residents fall deeper in debt, our entire community suffers. I recently had an out-of-state client marvel at the number of small loan businesses lining our major highway passageways. He asked why our economy was depressed. I told him we are not depressed, just temporarily misguided.