Trending
MOST READ
Beaches Be Trippin\': Five Texas Coast Spots Worth the Drive

Beaches Be Trippin': Five Texas Coast Spots Worth the Drive

Arts & Culture: Let’s face it, most of us Lone Stars view the Texas coast as a poor man’s Waikiki. Hell, maybe just a poor man’s Panama Beach — only to be used... By Callie Enlow 7/10/2013
Chris Perez, husband of slain Tejana icon Selena, tells of romance, suffering

Chris Perez, husband of slain Tejana icon Selena, tells of romance, suffering

Arts & Culture: In one of the final chapters of his book To Selena, With Love (out March 6), Selena's widower Chris Perez mentions that Abraham Quintanilla, his former father-in-law, once... By Enrique Lopetegui 3/7/2012
Andrew Weissman poised to open The Luxury in addition to two more restaurants

Andrew Weissman poised to open The Luxury in addition to two more restaurants

Food & Drink: In the last few years, San Antonio has seen an exponential rise in the number of quality restaurant offerings, several of... By Diana Roberts 2/27/2013
Chris Pérez, Selena’s Husband, Faces His Past and Looks Forward, Musically

Chris Pérez, Selena’s Husband, Faces His Past and Looks Forward, Musically

Music: Chris Pérez never saw it coming. “All I ever wanted to do was play guitar,” he told the Current. “I never thought I’d be the subject of an interview... By Enrique Lopetegui 8/28/2013
Texas Law Leaves Abortion Out of Reach for Many Women

Texas Law Leaves Abortion Out of Reach for Many Women

News: Texas’ sweeping abortion law has already eliminated all abortion clinics south of San Antonio, and the last clinic west of the city... By Alexa Garcia-Ditta 8/27/2014
Calendar

Search hundreds of restaurants in our database.

Search hundreds of clubs in our database.

Follow us on Instagram @sacurrent

Print Email

News

On Victory Drive, Soldiers Defeated by Debt

Photo: Michael Barajas, License: N/A

Michael Barajas

Ace Cash Express just outside the gates of Lackland Air Force Base in San Antonio


On Victory Drive, Soldiers Defeated by Debt

by Paul Kiel, ProPublica, and Mitchell Hartman, Marketplace, May 15, 2013, 5:50 a.m.by Paul Kiel and Krista Kjellman Schmidt, ProPublica, May 15

This story was co-produced with Marketplace. Listen to their coverage.

Seven years after Congress banned payday-loan companies from charging exorbitant interest rates to service members, many of the nation's military bases are surrounded by storefront lenders who charge high annual percentage rates, sometimes exceeding 400 percent.

The Military Lending Act sought to protect service members and their families from predatory loans. But in practice, the law has defined the types of covered loans so narrowly that it's been all too easy for lenders to circumvent it.

"We have to revisit this," said Sen. Dick Durbin, D-Ill., who chairs the defense appropriations subcommittee and is the Senate's second-ranking Democrat. "If we're serious about protecting military families from exploitation, this law has to be a lot tighter."

Members of the military can lose their security clearances for falling into debt. As a result, experts say, service members often avoid taking financial problems to their superior officers and instead resort to high-cost loans they don't fully understand.

The Department of Defense, which defines which loans the Military Lending Act covers, has begun a process to review the law, said Marcus Beauregard, chief of the Pentagon's state liaison office.

The act mainly targets two products: payday loans, usually two-week loans with annual percentage rates often above 400 percent, and auto-title loans, typically one-month loans with rates above 100 percent and secured by the borrower's vehicle. The law caps all covered loans at a 36 percent annual rate.

That limit "did do a great deal of good on the products that it covered," Holly Petraeus, the Consumer Financial Protection Bureau's head of service member affairs, said in an interview. "But there are a lot of products that it doesn't cover."

Representatives from payday and other high-cost lenders said they follow the law. Some defended the proliferation of new products as helpful to consumers.

A 400 Percent Loan

In June 2011, when Levon Tyler, a 37-year-old staff sergeant in the Marines, walked into Smart Choice Title Loans in Columbia, S.C., it was the first time he'd ever gone to such a place, he said. But his bills were mounting. He needed cash right away.

Smart Choice agreed to lend him $1,600. In return, Tyler handed over the title to his 1998 Ford SUV and a copy of his keys. Tyler recalled the saleswoman telling him he'd probably be able to pay off the loan in a year. He said he did not scrutinize the contract he signed that day.

If he had, Tyler would have seen that in exchange for that $1,600, he'd agreed to pay a total of $17,228 over two and a half years. The loan's annual percentage rate, which includes interest and fees, was 400 percent.

Recently in News
  • Texas Law Leaves Abortion Out of Reach for Many Women Texas’ sweeping abortion law has already eliminated all abortion clinics south of San Antonio, and the last clinic west of the city... | 8/27/2014
  • Cityscrapes: A race to the convention floor “Conventions go to the city which exerts the greatest efforts to secure them. San Antonio can get any convention that it goes after.” That was the position... | 8/27/2014
  • Mayoral Horserace Once elected next spring, San Antonio’s new mayor will have just a few months to prepare for the 2016 budget... | 8/27/2014
We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.
comments powered by Disqus