The typical story of a payday borrower is plain and simple: Every two weeks the paycheck comes and every bit must be divided between regular bills, rent, gas, any other regular expense and the looming payday loan that won’t go away.  As the payday loans pile on and other financial needs come up, the borrower simply cannot stay afloat and instead is forced to sink deeper in debt.

   It can all seem so simple at first, the bright neon lights promising instant approval and cold cash simply by providing a postdated, signed check and proof of income.  But after the eighth, the ninth, and the tenth 400 percent payday loan, what was meant to be a quick fix for a financial shortcoming had quickly become a cycle of debt with no clear end.

   This sorry story is all too common, particularly for Latinos, who make up a disproportionate portion of payday-loan borrowers.  The Center for Responsible Lending’s research shows that payday lenders in California have nearly eight times as many stores in neighborhoods with the largest concentrations of African Americans and Latinos than they do in white, non-Hispanic neighborhoods, draining nearly $247 million in fees a year from those communities.

   Even after controlling for income and other factors, payday lenders are 2.4 times more concentrated in African American and Latino communities.

   To put it into perspective, as of 2007, there were 44 payday lending stores in South Central Los Angeles and Van Nuys, both epicenters for the Latino and African American communities of Los Angeles. These stores collected more than $8 million in fees that year.

   Neighborhoods across the city with smaller concentrations of Latino and African-Americans — like Bel-Air, Pacific Palisades and Hollywood — had only nine payday lending stores within their boundaries collecting just over $1.6 million that year. 

   The plague that payday lenders represent is not limited to California. Only 15 states and the District of Columbia have implemented double-digit interest rate caps on mall loans. Such a cap is the only tried-and-true way to end abusive triple-digit interest-rate loans.

   For Latino families living outside of those few states, the danger of the payday debt trap is all too real with millions of dollars in excessive fees needlessly drained from them every year.

   The only national curb on payday lending applies to active military duty personel and their families. Congress, at the urging of the Pentagon, determined payday lending was too dangerous and corrosive to the financial well-being of these families. So if it’s not good for them, why isn’t payday curbed for the rest of us?

   We must do better. Too many young Latinos are growing up thinking a 400 percent payday loan is the only type of credit they can apply or strive for. As a result, entire families are falling under payday’s devious lure.

   Access to credit is a legitimate concern for many in the Latino community, but the last thing families there need — especially  during these tough economic times — is another abusive loan product designed to ensnare them into debt. 

   A federal rate cap of 36% annually is the answer.  This reasonable rate would ensure that payday loans are safe for borrowers. Working Latino families are already struggling enough from the recent economic collapse. They shouldn’t have to fight off legalized loan sharks, which is what payday lenders really are.