People Cab In Bellwood Opens Title Loan Business

Saturday, November 23, 2019 || By Michael Romain & Shanel Romain || @maywoodnews 

According to the Illinois Attorney General’s website, payday loans are often marketed as convenient solutions to short-term cash flow problems. The reality, however, is much different.

“Payday loans are an extremely expensive form of borrowing money,” the website states. “They often carry triple-digit interest rates and include all kinds of hidden fees. One payday loan can quickly snowball into too much debt for one family to handle.”

David Scott, the owner of People Cab, 200 30th Ave. in Bellwood, is quick to acknowledge the downsides of payday loans, even though he’s now in the business himself.

“We’re not trying to tell the public that these loans are the best thing in the world for you,” Scott said during the Nov. 23 grand opening for People Loan Club, 238 Mannheim Rd. in Bellwood. “You need to understand that these are high-interest rate loans and our community has been infiltrated by these loans. We are an alternative and a last-case scenario.”

The maximum interest rate on a 13-day title loan is 404 percent, or $15.50 per every $100 that’s borrowed. The typical payday title loan is $1,000 or less. Scott said that People Loan Club will offer a slightly lower, 398 percent interest rate, in addition to credit counseling.

“We’ll be showing people the value of money,” Scott said. “We [as African Americans] were raised to work hard, but not to think about our financial status; therefore, we work for money, we don’t know how to let money work for us. We got it backwards.”

Scott said that he wants to do more than collect interest on loans — he wants to help people get their finances straight in order to avoid taking out payday loans in the first place.

“Most people on a fixed income don’t have enough money to make it from point A to point B, so they use payday loans as a gap in their income,” he said. “But between that gap, the water pump or the furnace may go out. They already couldn’t make it as it is. Now, they’ve got a $400, $500, $600, $800 problem. It’s a vicious cycle, because if you’re on fixed money, that’s not going to ever change. So, before you take one of these loans out, you have to have a real, though-out plan on how to care of that underlying situation; otherwise, you’re digging a deeper hole.”

David Scott, the owner of People Cab and People Loan Club, both in Bellwood, says he’s well aware of the downsides of payday lending, which is why he wants to offer customers financial counseling, as well. | Shanel Romain 

Scott, who said that he’s the only African American in the state with the required licensing to start a title loan business, explained that he originally wanted to start a different lending business.

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“I was trying to do a loan club, where people are members and it would hardly cost them anything, but the state wouldn’t let me do it, because of the regulation,” he said. “That’s something I’m going to work to change.”

Scott said that it took him a year navigating “a lot of red tape” in order to acquire the licenses and four months to get the requisite software. He said that most of his competitors are giant franchises.

The pivot toward lending comes 37 years after his father, J. W. Scott, founded People Cab in 1982, and as the taxi industry faces an existential crisis due to the growing popularity of ride-hailing apps like Uber and Lyft. For instance, a 2018 Chicago Tribune report showed nearly half of the city’s roughly 7,000 licensed cabs were in “foreclosure or idled” that year, which led to “an increasingly desperate call for regulatory intervention — including a newly floated idea to cap the number of ride-sharing licenses in Chicago — to keep taxi fleets on the streets.”

Meanwhile, the title loan industry is growing. From 2009 to 2016, 381,590 title loan consumers took out 683,102 unique title loans, or roughly two loans per consumer, according to a 2016 report by the Illinois Department of Financial and Professional Regulation.

What’s more, the volume of title lending has grown by around 5 percent a year between 2009 and 2016. Most of that growth took place between 2009 and 2010, when the volume of lending grew by roughly 50 percent. In 2014, 2015 and 2016, the volume of lending declined by four, 10 and 12 percent a year, respectively.

For some People customers, however, the brand appeal is powerful, carrying over from cab rides to short-term loans. At bottom, their loyalty is about the company’s long commitment to the place where it does business.

People Cab gave community member 400 free turkeys on Nov. 23. The company, which is moving into the payday lending industry,held a grand opening of its title loan business on Saturday. | Shanel Romain 

“He’s a blessing to the community,” patron Barbara Cook said of Scott during an event on Nov. 23 that entailed People Cab giving away 400 turkeys. “He’s a gift from God to bless our black community. I’ve been taking the cab many years and never saw anything but good from this company.”

“I think it’s a wonderful idea to bring something to the community that can help residents, especially if they have lower rates to offer, said Latrice Giles.

Scott nonetheless said he understands that sensitive challenge of being in the title lending business, which he said is just a stepping stone before owning a full-fledged bank.

“I want people to understand my standpoint, because I walk a fine line between doing the right thing and putting people in a worse situation to fail,” he said.

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