Module 6
Avoiding Predatory Lending and Scams
“The borrower is servant to the lender.” — Proverbs 22:7
Lesson
What You Will Learn
- Recognize payday loans, title loans, and rent-to-own traps
- Calculate the true cost of borrowing
- Choose safer alternatives in an emergency
Lesson Notes
Predatory Products
- Payday loans: small, short-term loans with fees that often equal 300–400% APR or more.
- Car title loans: your car is the collateral; miss a payment and lose your transportation.
- Rent-to-own: weekly payments that can total two to three times the item's price.
- Buy now, pay later: easy to overuse; late fees add up.
The True Cost
A $300 payday loan with a $45 fee every two weeks costs $1,170 in fees over a year if it keeps rolling over, and you still owe the $300.
APR (annual percentage rate) shows the yearly cost of borrowing. Always ask for it.
Financial Scams
Watch for: pay-to-get-a-job offers, “government grant” calls, requests for gift cards or wire transfers, romance scams, and anyone asking you to cash a check for them.
Safer Alternatives
An emergency fund (Module 7), a small-dollar loan from a credit union, asking the creditor for more time, church benevolence funds, and community assistance programs.
Key Terms
| Item | Details |
|---|---|
| APR | Annual percentage rate: the yearly cost of borrowing |
| Payday loan | A high-cost short-term loan due on your next payday |
| Rollover | Paying a fee to extend a loan without paying it down |
| Collateral | Property a lender can take if you don't pay |
In-Class Activities
True Cost Calculator
A TV costs $400 in a store. Rent-to-own charges $25 per week for 52 weeks. What is the total? How much more is that than the store price?
Emergency Choices
Your car needs a $350 repair to get to work. List three options from safest to riskiest and explain your choice.
Assignment: My No-Predatory-Debt Plan
Write a one-page plan: which products you will avoid and why, three safer places to turn in an emergency, and a script you'll use to say no to a high-pressure offer.
Graded with the Module Assignment Rubric.
Reflection Journal
Proverbs 22:7 says the borrower is servant to the lender. Have you ever felt trapped by debt or by owing someone? What would financial freedom look like for you and your family?
Prayer focus: Ask God to protect you from traps and to lead you into freedom.
Weekly Reading & Devotions
Traps That Look Like Help
When money is tight and a bill is due, a payday loan or car title loan can look like a lifeline. Too often, it becomes a trap.
Payday loans often carry fees equal to 300–400% APR or more. A $300 loan with a $45 fee every two weeks, rolled over for a year, costs $1,170 in fees, and you still owe the original $300. Car title loans put your transportation at risk. Rent-to-own stores can charge two or three times an item's price. Buy now, pay later plans are easy to overuse.
Scams also target women coming home: jobs that require you to pay for training, “grant” calls, requests for gift cards or wire transfers, and people asking you to cash checks for them.
Safer choices exist. Build an emergency fund, even a small one. Ask a credit union about small-dollar loans. Ask the creditor for more time. Look into church benevolence funds and community assistance programs.
Proverbs says the borrower is servant to the lender. Avoiding predatory debt protects your freedom in more ways than one.
Think About It
- Have you or someone you know been caught in a payday loan or rent-to-own trap? ______________________
- What safe options could you turn to in an emergency? ______________________
- How will you say no to a high-pressure offer? ______________________
Daily Devotions for Week 6
Servant to the Lender
The rich ruleth over the poor, and the borrower is servant to the lender.— Proverbs 22:7 (KJV)
Debt can take away freedom. Guarding against high-cost debt is guarding your freedom.
Reflect: Where has debt felt like bondage?
Pray: Lord, keep me free from harmful debt.
Do: Write your no-predatory-debt promise.
Deliver Us
And lead us not into temptation, but deliver us from evil.— Matthew 6:13 (KJV)
Temptation often comes as a quick fix. We can pray for deliverance before the moment of pressure arrives.
Reflect: What quick fix tempts you most?
Pray: Lord, deliver me from temptation.
Do: Plan what you'll say to a high-pressure offer.
The Simple and the Prudent
A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished.— Proverbs 22:3 (KJV)
Prudence sees trouble coming and avoids it. Planning ahead for emergencies is prudent.
Reflect: What trouble can you see coming that you can prepare for?
Pray: Lord, make me prudent.
Do: Name three safe places to turn in an emergency.
God Cares for the Poor
For the oppression of the poor, for the sighing of the needy, now will I arise, saith the Lord.— Psalm 12:5 (KJV)
God sees exploitation of the poor, and He cares. You are not invisible to Him.
Reflect: Where have you felt taken advantage of?
Pray: Lord, thank You for seeing me.
Do: Pray for others trapped in debt.
Sharing Needs
Neither was there any among them that lacked.— Acts 4:34 (KJV)
The early church shared resources so no one lacked. Asking your church community for help is part of how God designed His family to work.
Reflect: Is it hard for you to ask for help?
Pray: Lord, help me give and receive help in community.
Do: Find out if your church has a benevolence fund.
Module Quiz
- 1.
Which product often has an APR of 300% or more?
- 2.
With a car title loan, what can happen if you miss payments?
- 3.
Which is the safest option in a small emergency?
- 4.
A rollover pays down the amount you borrowed.
- 5.
Rent-to-own: $25 per week for 52 weeks for a $400 TV. What is the total, and how much extra?