Navy Warns of Predatory Loans

Stating that a Sailor’s financial readiness directly impacts unit readiness and the Navy’s ability to accomplish its mission, Vice Adm. J. C. Harvey, Jr., Chief of Naval Personnel, has warned Sailors about predatory lending traps. Predatory lending includes the payday loan, automobile title pawn, tax refund, and rent-to-own furniture, he explained. The loans are usually small, short-term arrangements designed to bridge cash-strapped borrowers until their next paycheck. However, they are expensive, high-interest loans that often cost 10-to-44 dollars per week per 100 dollars borrowed, plus fees, creating an annual interest rate that routinely exceeds 1,000 percent. Many loans are rolled over to the next payday, leading to a situation where the sailor cannot pay off the loan. A recent survey by the Defense Manpower Data Center indicates that 13 percent of Sailors have used a predatory loan in the previous 12 months, he said.