That loan led to more loans, a dozen of them, until she was funneling most of her income into interest payments
Mary Shay, 65, took out her first installment loan 10 winters ago when she couldn’t afford firewood for the two-room home she shares with her sister on the Navajo reservation 10 miles from Gallup.
“I thought they’d arrest me,” said Shay, who says the lenders started calling her at work, first at the hotel where she cleaned rooms and later at the Catholic Charities run thrift store where she works now. Shay can’t count the number of cold nights she passed without firewood, which she couldn’t afford due to interest payments.
Because she earns so little, it’s likely that if her lenders took her to court, the amount they would be able to garnish from her paycheck would be hundreds less than she had been paying in interest.
Tammy Lee, a 21-year-old Navajo woman, says taking out a small-dollar loan was the worst decision she ever made
Jean Philips, an attorney at New Mexico Legal Aid in Gallup, says the consequences of small-dollar lending reaches far beyond debt and can deeply impact a borrower’s life. Her clients regularly lose their cars and mobile homes to repossession. “I’ve had clients who’ve gone hungry because they are paying back their loans,” she said. (suite…)