AUSTIN (Nexstar) — Just over a year ago, Basil Perkowski and his wife took out a payday loan to cover his emergency dental work. 

“I had developed a severe infection from a dental problem,” he said. “I was going to have to go to the emergency room for sepsis. It was that close.” 

Perkowski didn’t have dental insurance and says he and his wife were unable to afford the full amount for his dental work. The cash loan they obtained seemed manageable at the time – six payments of $691. 

“After about four payments, I had called the loan place and wanted to know what my payoff would be,” Perkowski said. 

During that phone call, the couple learned they weren’t close to paying off the loan due to high interest and finance charges. 

Perkowski and his wife, Shelly, were able to receive help from The Society of St. Vincent de Paul. The Society of St. Vincent de Paul has a Predatory Loan Conversion Program, which helps people trapped in payday or auto title loan debt. So far, they’ve converted 237 predatory loans and have seen an average interest rate of 327% in the loans they’ve converted.  

“We’re not trying to do a band-aid,” Executive Director Roz Gutierrez said. “We’re trying to systemically move people out of the situation that’s not healthy financially for them. We pay off the entire loan and then we reissue a loan to them through one of the credit unions. They pay back the credit union. Our interest rate is 2.25%, which is different than what they’re getting. Because they’re paying it to a credit union, the credit union is actually making reports to the credit bureaus every three months.” 

If the people in the program pay everything on time in the full amount, they get a 10% rebate, she added. For example, if it’s a $4,000 loan, $400 of it will go back into their savings account. 

David Dennis, of Nolanville, took out an auto title loan this year. The small business owner said he was in a car crash three years ago and it’s taken time to cover visits to the doctor, treatment and living expenses. 

“I knew I could borrow the money in a pinch there,” he said. “The thing that got me in a jam was not realizing the 317% interest and it was just difficult at times to catch up to it.” 

Dennis said he was making minimum payments and by the time he finally paid off the loan, he ended up paying nearly four times more than he borrowed. He says he’s lucky he didn’t lose his car but knows others who’ve taken out auto title loans who’ve had that experience. 

The stories by Perkowski and Dennis aren’t unusual, other experts say. Ann Baddour, director of the Fair Financial Services Project at Texas Appleseed, says Texas has some of the weakest standards as a state for very high cost loans.  

“Texans have become the cash cow for these businesses,” Baddour said. 

“Last year, Texans paid $1.9 billion in fees on these loans that can often average over 500% APR,” she added. “People lost over 37,000 cars to auto title lenders.” 

The Military Lending Act, a federal law passed in 2006, sets a 36% cap for loans on active duty military members. Baddour says that protection is needed for everyone else. 

“It’s proven beneficial for our military families,” she said. “I think it’s time we look to expand these protections across the board. 

There’s currently a bipartisan effort in Congress called the Veterans and Consumers Fair Credit Act to get that cap extended to everyone else. It’s backed by Congressman Glenn Grothman, R-Wisconsin, and Congressman Jesus “Chuy” Garcia, D-Illinois. 

A 2018 survey conducted by Texas Appleseed found veterans are particularly vulnerable to payday and auto title loans, too. Out of the 157 veterans or veteran spouses who completed the survey, 58% used the loans to pay utilities, 42% used them to pay rent and 38% used them for groceries and gas.  

Dennis and Perkowski say the 36% cap is reasonable and doable for people.  

“I think it’s a great thing that definitely needs to be looked into and regulated,” Perkowski said. 

The Online Lenders Alliance, whose members are tied to online financial services, is opposed to the proposal. 

“It’s disappointing that Reps. Garcia and Grothman would use the sacrifice and dedication of America’s veterans as political cover for their legislation to eliminate credit options for people who need safe and reliable access to loans,” the organization said in a press release. “Many Americans who lack prime credit scores depend on safe, regulated, short-term credit products to avoid bouncing checks, skipping bill payments, or otherwise falling behind—all of which can lead to drastic outcomes.” 

Gutierrez recognizes that payday lenders have a business to run. However, she wants them to consider the human impact and hopes the latest legislation opens their eyes to how families are being drained. 

“You want people to treat each other with compassion and understand that when somebody’s in a situation where they’re having difficulty making ends meet, they’re having difficulty, because of that, thinking more clearly, to just take advantage of them and go with a high-interest loan is not helpful,” she said.