“And I will restore to you the years that the locust hath eaten.” — Joel 2:25
Lesson
What You Will Learn
- Calculate the true cost of payday loans and rent-to-own agreements
- Explain how title loans put transportation at risk
- Describe secured cards and credit-builder loans in general terms
- Build a one-year credit rebuilding plan
Lesson Notes
Predatory Traps, Revisited
In BTO 103 you met payday loans, title loans, and rent-to-own. Here we look deeper at how they keep people paying. Their power is the repeat fee: you pay to extend the loan without reducing what you owe.
Example with sample numbers: Tanya borrows $300 from a payday lender with a $45 fee due in two weeks. (Tanya is a composite example.) She cannot repay, so she pays the $45 fee to extend it, five more times. That is 6 × $45 = $270 in fees, and she still owes the original $300. Repaying it in full costs $300 + $270 = $570 for a $300 loan.
A title loan uses your car as collateral. If you miss payments, you can lose the car you need to get to work.
Rent-to-Own and Buy Now, Pay Later
Rent-to-own lets you take an item home for weekly payments. Example: a sofa sells for $600 in a store. Rent-to-own charges $30 per week for 52 weeks: 30 × 52 = $1,560, which is $960 more than the store price. Buy-now-pay-later plans can be fine when paid on time, but late fees and stacking several plans can add up quickly. Read every agreement before signing.
Safer Alternatives
A starter emergency fund (FFS 232), asking the creditor for more time, a small-dollar loan from a credit union, church benevolence help, community assistance programs, and selling something you do not need. Waiting and saving for a purchase is almost always cheaper than borrowing for it.
Rebuilding Credit Step by Step
- Pay every bill on time. Payment history is a major factor in scores.
- Secured credit card: you give the lender a deposit that usually becomes your limit. Use it for one small, planned bill and pay the full balance every month. Example: a $25 phone bill on a $200 secured limit is 25 ÷ 200 = 12.5% utilization.
- Credit-builder loan: offered by some credit unions and community lenders. In general, the loan amount is held in a savings account while you make monthly payments, and you receive the money at the end. Example: $600 repaid in 12 payments of $50 (plus any interest or fees the lender discloses).
- Keep utilization low and avoid many applications at once.
- Check your reports regularly at AnnualCreditReport.com.
Rebuilding takes months and years, not days. Every on-time payment adds to a new record.
Key Terms
| Item | Details |
|---|---|
| Rollover fee | A fee paid to extend a loan without reducing the balance |
| Collateral | Property a lender can take if you do not pay |
| Secured credit card | A card backed by your own deposit |
| Credit-builder loan | A small loan, generally held in savings, that reports your payments as you make them |
| Benevolence fund | Church or community money set aside to help people in need |
In-Class Activities
True Cost Lab
Calculate each:
- a) A $300 payday loan with a $45 fee every two weeks; the borrower pays the fee 6 times and then repays the $300. Total fees? Total paid?
- b) A $600 sofa; rent-to-own at $30 per week for 52 weeks. Total? How much extra?
- c) A $200 secured card limit with a $25 phone bill on it. Utilization?
- d) A $600 credit-builder loan repaid over 12 months. Monthly payment before any interest or fees?
Rebuilding Timeline
Put these steps for Denise in a sensible order over her first year, with a target month for each: get free credit reports; dispute the Quick Cash account; open a secured card; set up automatic payment for the phone bill; apply for a credit-builder loan; check reports again; build a $500 starter emergency fund. (Denise is a composite example.)
Assignment: My Credit Rebuilding Plan
Write a 12-month credit rebuilding plan (personal or composite):
- When you will pull your reports and how often you will check them.
- Which disputes, if any, you will file.
- One or two credit-building tools you will consider, described in your own words, and how you will use them safely.
- How you will keep utilization low and pay on time (reminders, automatic payments).
- The predatory products you will avoid and your three emergency alternatives.
Graded with the Module Assignment Rubric.
Reflection Journal
Joel 2:25 promises that God will restore the years the locust has eaten. What years or opportunities feel lost to you? What might restoration look like, in your finances and beyond?
Prayer focus: Ask God to restore what was lost, protect you from traps, and give you patience to rebuild one faithful step at a time.
Weekly Reading & Devotions
Restoring the Years
Predatory lenders count on urgency. When the rent is short or the car breaks down, a quick loan with no questions feels like rescue. But Tanya's $300 payday loan cost her $570 by the time she repaid it. (Tanya is a composite example.) The repeat fee is the trap.
God has always cared about people being exploited when they are poor. Exodus 22:25 told Israel not to charge usury to the poor. Today, you can protect yourself by knowing the true cost, having an emergency fund, asking creditors for time, and turning to your church, a credit union, or community programs before a payday or title lender.
Rebuilding credit is slow but sure. Pay every bill on time. If you use a secured card, put one small bill on it and pay it in full. A credit-builder loan, where available, can add on-time payments to your record. Check your reports and keep balances low.
Joel 2:25 holds a promise: I will restore to you the years that the locust hath eaten. Lost years, lost credit, lost opportunities: God is able to restore. Your part is faithfulness, one payment and one wise choice at a time.
Think About It
- What situation might tempt you toward a predatory loan? ______________________
- What three alternatives will you turn to instead? ______________________
- What would restoration look like for you? ______________________
Daily Devotions for Week 7
Restored Years
And I will restore to you the years that the locust hath eaten, the cankerworm, and the caterpiller, and the palmerworm, my great army which I sent among you.— Joel 2:25 (KJV)
God restores what seemed lost. Rebuilding credit is one small picture of that.
Reflect: What years do you want God to restore?
Pray: Lord, restore what the locust has eaten.
Do: Write one rebuilding step with a target month.
No Usury
If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.— Exodus 22:25 (KJV)
God opposes exploiting people in need. You are worth protecting.
Reflect: Which offer looks like a trap to you now?
Pray: Lord, protect me from those who exploit.
Do: Calculate the true cost of one loan offer.
Foresee the Evil
A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished.— Proverbs 22:3 (KJV)
Planning ahead for emergencies keeps you out of traps.
Reflect: What emergency could you plan for now?
Pray: Lord, make me prudent.
Do: List your three emergency alternatives.
Look Well
The simple believeth every word: but the prudent man looketh well to his going.— Proverbs 14:15 (KJV)
Read every agreement before signing. Do not believe every promise.
Reflect: What will you check before signing anything?
Pray: Lord, help me look well to my going.
Do: Write three questions to ask before signing a loan.
Repairer of the Breach
And they that shall be of thee shall build the old waste places: thou shalt raise up the foundations of many generations; and thou shalt be called, The repairer of the breach, The restorer of paths to dwell in.— Isaiah 58:12 (KJV)
God rebuilds ruins through His people. Your rebuilding can bless generations.
Reflect: Who will benefit from your restored credit?
Pray: Lord, make me a repairer of the breach.
Do: Share one lesson from this course with someone you love.
Module Quiz
- 1.
Tanya pays a $45 payday fee six times and then repays the $300. What did she pay in all?
- 2.
A secured credit card is backed by:
- 3.
Rent-to-own at $30 per week for 52 weeks costs:
- 4.
Paying the full secured card balance every month helps keep utilization low.
- 5.
Name three safer alternatives to a payday or title loan.