With all the payday lenders going up it seems as they just all sprung up at once. However are they a defective product in itself putting more people into debt than getting out?
In Ohio ( my home state) there is currently a big discussion going on about restricting some of the things these lenders can do. For example the payday lenders in Ohio can charge over 300% interest to these small personal loans. This could obviously create a problem to the point where people will become dependent on them.
When I first heard this story it sounded like the payday lenders where getting away with predatory lending in a sense being able to charge unheard of interest rates.
Check this out.
Currently Ohio has opt to cap the amount of interest these payday lenders can charge. However the payday lenders feel this could force a lot of the payday lenders to go out of business. Putting as many as 6,000 people out of a job.
How do you feel about this? Should there be payday lenders, or is it ok as long as there is a cap on the interest rates?
Let me know how you feel.
Ohio consumers are much better off, now that there is a cap on payday loan interest rates. Payday loans negatively impact hundreds of thousands of Ohioans and push many to brink of financial ruin. Payday lending, in its pre-HB 545 form, is bad for Ohio’s families, communities and economy. As you’ve probably noticed, the payday lobby has been working overtime in our state to convince voters that 391% interest amounts to financial freedom. 391% interest isn’t freedom, it’s a trap! Between the millions of dollars in ads and the enumerable examples of payday lending circulators lying and deceiving voters, November’s Issue 5 will be confusing at best.
Here’s a video with Ohio voters detailing their experiences with payday lending petitioners: http://www.youtube.com/watch?v=zDoeXujagE4. This Sunday, the payday lobby submitted their signatures to the Secretary of State. It’s a safe bet that a hefty percentage of those signatures will be thrown out due to a large number of unregistered voters. There are thousands more signatures that were clearly collected under false pretenses – some people even believing that their signature will help to “lower interest rates” on payday loans, which is completely contrary to the truth.
The Plain Dealer has a good editorial that may help clear up the issue for voters: http://www.cleveland.com/editorials/plaindealer/index.ssf?/base/opinion/1220171618297310.xml&coll=2%20
I hope you and your readers will spread the word! Vote Yes on Issue 5 for lower interest rates!
http://www.yesonissue5.com
Bottom line for me is that issue is really about PERSONAL Choice.
For every $100 borrowed in Ohio, the fee is $15. Payday loans are intended to be for 2 WEEKS, therefore annualzing the percentage rate is false and misleading since rollovers are not allowed in Ohio. $15 is cheaper than bouncing a check, my mortgage payment, my car payment or getting assessed a late fee. And it certainly is better to borrow some money for a short period of time than go without food, gas, medicine or electricity.
I work hard for my money– If I make the decision to spend it all on booze and alcohol— no one can stop me. And those two vices can KILL me!!! If I want tp blow it all on a trip to the casino– no one can stop me. But according to the Ohio General Assembly, if I need a small loan to tide me over until next payday to cover my gas expenses– I am not allowed to do that. What irony!!!
Ohio can not AFFORD to lose any more jobs– we are losing jobs by the hundreds and thousands. And eliminating freedom of choice for financial decisions is paternalistic. The Ohio General Assembly has managed to accrue a 60 MILLION dollar deficit– what makes them think they can better our personal money??
Let the citizens of Ohio decide in November!! VOTE NO!!!!!
I agree, this is a big issue with Ohio. I hope that Ohio voters consider this issue very seriously. As election day draws near I will be talking about this issue more and more. Thanks for the great comment!
This is about greed, pure and simple. At public hearings on the topic, the lenders admitted that they expect to write off about one-third of their loans. How can they afford such a high default rate? By gouging the remaining two-thirds.
All this talk about losing 6000 jobs is crap. If rates are capped at 28%, and the lenders no longer have to write off one-third of their loans, should that be good for the borrowers, good for the lenders and good for the state?
That’s an interesting point Marty. It is greed on the lenders part. With rates caped I feel this could help a lot. Even though 28% is still high but it’s better than paying 391%.
I really, really love how the payday lenders and their proponents cry foul, suggesting that we all need access to 391% APR loans and that they are really just here to help the little guy. This is just preposterous! They are simply unwilling to acknowledge (conveniently) that payday loans are designed to trap people in a cycle of debt where they have to keep going back again and again. Designed! Their profits are predicated on their ability to gain repeat customers who need to keep coming back.
I agree with Marty too – the jobs argument is unfounded. Over 1,000 of the state’s 1,600 payday lending shops has filed for new licenses with the Ohio Department of Commerce to keep operating under the new law.
Vote yes on issue 5! 391% is just way too high!
Donnie, the cap on the rates at 28% APR on a TWO WEEK LOAN COSTS lenders to lend money because the money is lent in 1/26th of what the APR reflects due to the term of the loan. It would cost more to print out a contract than the profit of a little under a dollar. DO THE MATH. Therefore this bill would ERADICATE the industry. People need the OPTION to loan if needbe. The governments job is the regulate a state–not it’s peoples choices. Get Real VOTE NO ON ISSUE 5, Preserve Freedom, Preserve Options, Preserve CHOICE.
You all don’t seem very well versed in the Ohio Payday Industry since you are latching on to the “myths” and therefore purposely mistating the fees and the process.
First– it’s $15 per $100 borrowed, which is 15% for 2 weeks. To state that its equivalent to annual APR of 391% is WRONG and FALSE. Payday loans are intended to be short term, not for a year. So you are comparing apples and oranges.
Second– there is a maximum number of loans allowed at one time. Ever heard of Teletrak?
Third- *NO* interest is added to a payday loan in Ohio. The intial fee is the ONLY fee, unless you don’t pay back the initial loan and are being sued to recover it– the law allows the companies to pursue civil litigation and attach interest at that point.
Fourth- some people do “get in over their heads” in terms of managing their finances, but the VAST majority do not. That issue has nothing at all to do with Payday loans, it has everything to do with personal responsibility, lack of financial education and unexpected life situations. People get in over the head and spend too much on alcohol, playing the lottery, cigarettes, gambling, clothes, credit cards, etc— should we run all of those out of business too?
Fifth– a payday loan is MUCH cheaper than the alternatives– bouncing a check ($30), incurring a late fee for a payment (20-$40), missing work b/c of the lack of gas until next payday, going without food, electricity or medicine for the same reason.
Today it was announced on CNN.com that the Unemployment Rate jumped from 5.7 to 6.1 for the country. I imagine Ohio’s rate will be even higher since we’ve been tracking higher for the majority of the year!! We are losing jobs left and right here in Ohio (DHL/ABX in Wilmington, GM in Dayton, etc)…. not exactly a good time to be laying off an additional 6000 Payday Employees. And eliminating a financial option for those that want and need it.
Bottom line– Ohioans should be able to choose how they spend their money. I don’t want the Ohio General Assembly dictating to me how, where, when and why I can spend the salary I earn. Just like I don’t want them suddenly deciding that since ice cream/candy can contribute to obesity so they need to ban sweets. Or Burger King doesn’t meet their *personal* standards nutritional, so bye bye Burger King.
VOTE NO and let Ohioans continue to have Financial Options available to them!
The payday lobby has arrived! More lines about financial freedom and choice – notice they only care about freedom and choice when their profits are dependent upon it!
“Fourth- some people do “get in over their heads” in terms of managing their finances, but the VAST majority do not.” Well, that’s just utterly false! Payday lenders make the majority of their profits from people who are trapped in debt. It’s an outright lie to suggest that most borrowers take out one loan, pay it back and are never seen from again. This is not a short-term problem, but a long term financial nightmare for a lot of people. Payday loans at 391% APR are immoral and just to get back to basics: $15 on $100 for a 2 week loan, ANNUALIZED, IS 391%!!! FACT!
Read this folks: http://www.responsiblelending.org/pdfs/rr012-Financial_Quicksand-1106.pdf.
All the payday lobby really cares about is how much money they can squeeze out of hardworking Ohioans. Vote yes on issue 5 for lower interest rates! It’s good for Ohio and good for Ohio’s economy!
Again I agree with Donnie. The interest rates are to high. This doesn’t mean they should shut down payday lending stores. They just want to get some control over the situation. This is a good idea.
I also agree that the great people of Ohio should have a choice of what they want to do, but that doesn’t mean they should get ripped off in the process.
Donnie– a 2 week loan is not an annualized loan!!! 391% is therefore incorrect and FALSE!!!! Payday loans are not written or intended to be 52 week loans and since rollovers are ILLEGAL in Ohio– it isn’t possible!!!!
There are THOUSANDS of Ohioans and US residents who are in trouble financially—– payday lenders aren’t to blame for that!
Umm, Donnie—Any company operates to PRODUCE A PROFIT–that’s why it’s called a business. So is your line of reasoning that any company that makes a profit from the service they provide, is immoral?? Are you in touch with reality???
Talk about being “ripped off”…. my bank now charges $28 if you bounce 1-2 checks in 12 months, $32 if you bounce 3-4 checks in 12 months and a WHOPPING $38 per check if you bounce more than 5+ in 12 months!!! Talk about a complete and utter ripoff!!
Its far less expensive to visit a payday lender to cover that $100 electric bill than incur a $28-38 fee by my bank for a bounced check. A $100 loan will only cost me $15. FACT!!!!!!
I guess it comes down to if you could make a buck at 28% apr then why arent they doing it?Banks and credit unions could do short term loans at 28%apr so why dont they?Just because these paid advocates are in the pockets of big banks and credit unions.They have a problem with payday lending.Its an attempt to force out a competing industry thats very popular so banks and credit unions can continue to make BILLIONS off of overdraft fee’s YES BILLIONS,look it up about 22 Billion last year (bank rate .com)and for the guy Donnie who said 391% annualized on a two week do you see the the back talk?A two week loan shouldnt be annualized.This isnt big economics here…Example if you annualize apr an atm machine it average about 1800%.Donnie think with your own mind and come to your own conclusions,but apr is the most misleading stat in this argument.On a two week loan why would apr come into play?The banking lobby has left the buiding it seems???VOTE NO ON ISSUE 5 CHOOSE CHOICE
And 6000 jobs do matter Marty.Thats why companies are leaving this state at an alarming rate to much state government involvement and regulations.Companies arent leaving Ohio for Idia anymore under Strickland there leaving for Indiana.VOTE NO ON 5
Come on guys! Banks and credit unions behind this? That’s absurd! More smoke and mirrors from the payday lending industry! Bank fees and credit card fees are too high as well – not going to get an argument from me on that!
And, how many times are you all going to just flat out lie about the number of loans people take out? How many people just take out one, pay it back and never have to come back? Very, very few. According to your own researchers, payday borrowers often end up trapped in debt for 18-24 months! So, doesn’t that mean that a payday loan probably ought to include an APR disclosure? Payday loans in Ohio ARE 391% APR. Fact. Period. End of Story.
Making a profit is not immoral. Making a profit off of people in poverty is and payday lenders are clearly in the poverty business.
Vote yes on issue 5! We need to end poverty and end 391% APR interest!
Donnie Donnie Donnie, you speak but you don’t back it up. Its really getting boring to read your same ol stuff. Profit off poverty. With our current Economic Status–Every business is predatory because they are profiting from poverty. And even THEY are prey.
You want the APR in your terms? SUPER–lets show the truth of how this math REALLY calculates out.
1. $100 payday advance with $15 fee is 391% APR.
2. $100 bounced check with $54.87 NSF/overdraft fee is 1431% APR;
3. $29 overdraft protection fee on 4. $100 is 755% APR.
4. $100 credit card balance with $37 late fee is 965% APR;
Well, Well–who is the most valuable? Banks? EHHH, Credit cards…EEHHHH–oh–what is it–Payday lending? DING DING DING–without payday loans you’ll be paying out even more–regardless of your “class status”.
Check ya later.
VOTE NO ON ISSUE 5–PRESERVE CHOICES OPTIONS AND FREEDOM
Well said Tara!! Those %s don’t lie!
Donnie– would you like to know how many times someone charges on their credit cards month after month, pays late, goes into Collections, files bankrutpcy, and /or uses CCC service to reduce payments? Or blow all of their $$ gambling or on the lottery? It’s their PERSONAL business!! Not yours or mine. It’s their money and they have the freedom to do what they want with their money. Even if we don’t agree or manage our finances that way.
Quite frankly, just b/c you don’t seem to need a payday loan doesn’t equate to them being unnecessary. They are a viable option to the fees Tara mentioned above.
Payday lenders are not ripping off the poor, anymore than the laundry mats are (since they are heavily concentrated in urban areas). Anymore than low income housing is mainly in city areas. Anymore than smaller convenience stores are. A Payday loans is a service, just like those others I mentioned.
First rule of any business– study the demographics of your audience, target your area where your customer base is and establish presence. Just b/c you start a business does not mean people are OBLIGATED to use it. They decide to or not!! They weigh options and make their own choices. I choose not to smoke and therefore don’t buy cigarettes, but I do drink alcohol. I choose WHERE, WHAT KIND, WHEN and HOW MUCH I PAY, etc— I am an adult and am entitled to make those responsible decisions for myself. If I choose to go to a drive thru to get wine or beer and pay a bit more for the convenience than I would at Walmart– so be it!!
VOTE NO— so you can spend your money as YOU see fit!!