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An Alabama legislative committee recently approved a bill that would lower fees charged by payday lenders in the state, but a church in Birmingham is going several steps further, paying off the loans for 48 families in financial need.

The Worship Center Christian Church, led by Pastor Vanable H. Moody, began paying off $41,000 in payday loan debt earlier this month for members and non-members alike.

“We’ve been in a teaching series about financial management, and one of the things we recognized in Alabama that’s a really bad epidemic is the payday loan industry,” Moody told local CBS affiliate WIAT TV. “So we solicited a number of people who were in overwhelming debt with the payday loan industry … we wanted to teach them, not just about financial management, but to give them the tools to get out.”

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The church also mandated financial counseling for the recipients of the loan payoffs so they can stay out of debt. A 2013 report from Pew Charitable Trusts showed that just 14% of payday loan borrowers can afford to repay the average payday loan. It found that “the average borrower can afford to pay $50 per two weeks to a payday lender — similar to the fee for renewing a typical payday or bank deposit advance loan — but only 14% can afford the more than $400 needed to pay off the full amount of these non-amortizing loans.”

“I wanted [the congregation] to understand how bad debt is— it really is like a prison,” Moody said in the WIAT TV interview, discussing a February sermon he gave while wearing a prison uniform and shackles. “We want people to be aggressive about getting out of debt, to help their lives, their children and successive generations.

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Under current Alabama law, lenders can charge fees of $17.50 per $100 borrowed for loans that must be repaid in as little as 2 weeks, but a new bill approved by the House Financial Services Committee earlier this month seeks to reduce the maximum allowable fee to $15 per $100, reducing the annual percentage rate by 180%, from an average of 455% down to 275%.

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What to Consider Before Getting a Payday Loan

Before you consider applying for a payday loan, step back and consider your options. Ask yourself if it is really an emergency. Is it possible to wait to repair your car or pay your bills until your next paycheck? Remember, a $25 late fee on a bill is cheaper than a $40+ finance charge for a payday loan. Think about other ways to borrow money that are often lower-interest options:

  • Negotiate a payment plan with the creditor.
  • Charge the amount to your credit card.
  • Receive an advance from your employer.
  • Use your bank’s overdraft protections.
  • Obtain a line of credit from an FDIC-approved lender.
  • Borrow money from your savings account.
  • Ask a relative to lend you the money.
  • Apply for a traditional small loan.
  • Ask your creditor for more time to pay a bill.
  • Use a cash advance on your credit card.

If you have evaluated all of your options and decide an emergency payday loan is right for you, be sure to understand all the costs and terms before you apply.

  • Shop around for a trusted payday lender that offers lower rates and fees.
  • Borrow only as much as you know you can pay back with your next paycheck.
  • When you get paid, your first priority should be to pay back the loan immediately.

If your bad credit is keeping you from getting a credit card or qualified loan, you can start repairing your credit. Getting negative, inaccurate information off of your credit reports is one of the fastest ways to see an improvement in your scores.