Tag: Ohio payday loan law


Payday Loans: Ohio Still going Strong

Although Ohio voters supported a measure to reduce payday loan maximum Annual Percentage Rates to 28%, the payday loan industry is still going strong in Ohio.

Could it be that the VOTERS in Ohio are not the payday loan CONSUMERS?

Legislators, regulators and so-called “consumer protectionists” cannot legislate DEMAND for payday loan type products away. Consumers have always needed access to small, short-term, non-collateralized loans. And in today’s economy the need for payday loan type products is even greater!

In 2008, the Ohio state legislature voted to rescind the 12-year-old law that exempted payday lenders from the state’s usury laws — a vote Ohioans supported 2 to 1.

HB 545 was supposed to help consumers by creating a Short-Term Loan Act that gave borrowers at least a month to pay off loans. Additionally, the new law was supposed to drive down the costs.

Instead, many payday loan operators chose to close their stores and leave the state. Those that remain explored alternative approaches and as a result, are prospering due to less competition and creative tactics allowing them to remain in business.

The Short-Term Loan Act specifically capped the APR at 28 percent. As a result, payday loan lenders switched their licenses so they could offer payday clones under two parallel lending statutes, the Small Loan Act or the Mortgage Lending Act.

By adjusting the loan amount to just above $500, payday loan lenders double the loan origination fees from $15 to $30. The Small Loan and Mortgage Lending acts allow the fees on top of the 28 percent interest, something the new law doesn’t permit.

Last year, payday stores gave loans to customers as cash or an ACH into their bank account, but this year lenders present loans in the form of checks or money orders, which they then charge additional fees to cash.

As an example, when a payday loan was transacted previous to HB545 a payday loan customer paid $575 to receive $500 in cash.

Under the new HB545 licensing scheme with the check cashing fees added, customers pay the same $575 to walk out the door with $500 in cash.

Ohio lender CheckSmart Chief Executive Ted Saunders says that technically CheckSmart makes less on loans because customers may choose to cash their money orders elsewhere. Saunders said CheckSmart gives loan customers a discount on check cashing and ensures that customers don’t spend more now for loans than they did last year. For the borrowers who deposit or cash their checks at their own bank, their real cost for a two-week $400 loan is under $30, which is less than the $60 paid by them under the former payday loan law and less, according to the FDIC, than the cost of an overdraft at an FDIC bank.

Prior to HB545, Lenders typically charged $15 for every $100 borrowed. Now prices are all over the map. We expect this situation to flatten out with time in Ohio.

A First American payday loan customer indicted he previously paid $75 for a $500 loan, First American charged him a total of $90 to borrow the same amount after the law changed.

More than one Ohio payday loan company has structured their check cashing and loan operations as two separate entities to justify the fees.

Attorney General Rich Cordray said his office has found payday clones with APR’s ranging from 128 to 700 percent.

“It’s very problematic,” he said. “What we have is overlapping statutes. . . . I think it very clearly circumvents the legislative intent.”

Ultimately, there is a lot of confusion in Ohio as a result of the the attempt by fools to legislate away a product that millions need, want, use and demand!


Payday Loan Job Losses in Ohio

Check ’n Go payday lending chain said Tuesday that it will close about half of its Ohio stores over the next several months.

CNG Financial said it will close 36 of its 71 stores in the state, eliminating up to 75 jobs. The company didn’t specify which sites would be shut down, but a spokesman said closures would be based on lending volume.

The Cincinnati-based company has seven Central Ohio payday lending shops.

Sixty four percent of Ohio voters cast their ballots in favor of Issue 5, which supported a law capping interest rates for payday lenders at 28 percent a year. The payday lending industry fought a $13,000,000 battle to repeal portions of the law, House Bill 545, saying the interest rate cap and other limitations would drive many of them out of the state. Payday lenders tried in vain for a rate that allowed them to charge a 391 percent APR.

Texas-based Cash America (NYSE:CSH) announced that it would shut down 43 of its 140 shops in Ohio.

Remaining Check N Go stores will offer loans permitted under the Ohio Small Loan statute, as well as check-cashing services. CNG operates more than 1,300 Check ’n Go locations in 31 states.


Ohio Payday Loan Customers Worried!

Payday loan consumers in Ohio are expressing their fears about the future of the payday loan industry. They worry they will no longer have access to small dollar, no-hassle, no credit check payday loans in the future. They urge a VOTE NO on Issue 5!

Ohio payday loan ballot measure Issue 5, if passed will reduce allowed fees from $15 per $100 to $1.50 per $100. Should this occur, it’s estimated 6000 Ohio jobs will be lost, hundreds of thousands of Ohio payday loan consumers will be forced to use payday loan Internet web sites, the state of Ohio will lose tens of thousands of dollars in payday loan licensing and auditing fees, and commercial property owners who lease stores to payday loan companies.

One customer in a store in Heartland, Ohio on Friday said payday lending was there when he needed it.

On Aug. 19, Jim Hurley suffered a heart attack. While he was recovering, his bank account was overdrawn $21.

According to Hurley, his bank would have charged fees higher than a payday lending loan to cover the shortfall if the overdraft was not resolved quickly.

“I had to find a way to clear up my account fast,” he said.

Hurley went to a payday lender and was able to get his account back on positive footing.

“Places like these help when times are bad,” he said.

The Ohio ChillicoThe Gazette has several anecdotal payday loan consumer stories.


Payday Loans – Ohio Update

The payday loan initiative scheduled to be voted on in the November ballot is at risk of being left off the ballot.

Secretary of State Jennifer Brunner said she’ll appoint a hearing officer to decide if consultants hired to collect signatures to place the measure on the ballot properly filed the petitions.

Gov. Ted Strickland in June signed a law restricting the annual percentage rate that lenders can charge to 28 percent, and limit the number of loans customers can take to four per year.

The payday loan industry managed to collect 422,000 petition signatures to place their initiative on the November ballot.The ballot measure needs 241,000 signatures from at least 44 of Ohio’s 88 counties to qualify.

The payday loan measure will repeal the cap on interest, allowing lenders to charge roughly 400% APR’s depending on the term of the payday advance.

Parties supervising the collection of ballot signatures must file a Form 5 with Ohio that lists the names and addresses of signature gatherers and the names of their employers. Brunner’s office can’t seem to find evidence the form was filed by Arno Political Consultants, a California firm hired to collect a portion of its signatures.

This failure could result in having the payday loan measure deleted from the ballot.

Sec. of State Brunner will decide Sept. 25 whether to accept the signatures and allow the referendum to be placed on the ballot.