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Payday loans: An insider’s perspective

Concordia, MO – When Graham McCaulley was a junior at the University of Missouri in Columbia, he saw a help wanted sign in the window of a payday lending store. McCaulley didn’t know much about payday loans, but he needed a job and applied. For almost a year he worked part-time at the store, granting loans, taking payments and working on collections, while making just above minimum wage.

Payday loans are short-term loans – less than $500 in Missouri – that are paid back with a borrower’s next paycheck, usually two weeks or a month later. All that is needed to qualify is a source of income and a checking account. Proponents argue that the loans can be a source of credit for those that can’t get it anywhere else. But consumer activists, who almost universally decry the loans, point out that borrowers are often forced to repeatedly renew or take out additional loans in order to pay the interest, which can lead to damaging cycles of repeat borrowing.

McCaulley said that one of his primary duties was working on collecting loans that were late or had gone bad, including going to borrowers’ homes and workplaces to ask them to come make a payment.

“A lot of that was an embarrassment factor,” he said.

At one point McCaulley was instructed to dress up in a suit and imply that he was from the corporate office when he went to find borrowers that were behind on their loans.

“I was supposed to use this really vague language, like, ‘corporate is considering legal action,’ even when I knew that they weren’t going to take anyone to court at this time, but it was an intimidation factor.”

Now, more than six years later, McCaulley is working on his Ph.D. and has made complete turnaround as a leader of a grassroots organization in Missouri that’s working to put a question on the ballot this fall that would cap interest rates for payday, and other short term loans in the state.

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