A Conflict of Interest Rates
Issue 5: Should Ohio Regulate the Payday Lending Companies?By JOSELYN KING
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Fact Box
PRO-LENDERS
Name: Ohioans for Financial Freedom
Primary benefactor: Community Financial Services
Association
Amount raised: $15.1 million
PAC: Reject House Bill 545 Committee
Supporters Vote: No
ANTI-LENDERS
Name: Coalition for Responsible Lending
Primary benefactor: Coalition on Homelessness and Housing in Ohio
Amount raised: $266,000
PAC: Is 391% Too High? Vote Yes on 5 Committee
Supporters Vote: Yes
Many Ohioans contend they have a right to borrow money against their next pay check when they need it. Other residents, meanwhile, believe "payday lending" companies prey on these people.
The Ohio General Assembly this year passed legislation regulating how short-term lending companies do business, and now opponents are seeking to overturn it through a referendum.
The measure goes before voters in the Nov. 4 general election.
- A "yes" vote on the referendum would permanently set these regulations.
The maximum loan amount from a payday lender would be $500, and borrowers would have at least 30 days to repay the loan. Under the new lax, the maximum interest rate charged by short-term lenders would be would be capped at 28 percent.
Individuals would be limited to four short-term "payday" type loans during the course of a year, and those taking out loans would have their names registered into a database.
Among the supporters of the referendum crafting arguments for the Ohio Secretary of State's Office are Columbus Mayor Michael Coleman, and representatives of the Ohio Association of Community Action Agencies, Ohio Association of Second Harvest Foodbanks and Habitat for Humanity-Ohio.
They contend the new laws help to "break the cycle of debt" in Ohio.
"Payday lenders prosper by trapping vulnerable Ohioans into a cycle of repeat borrowing," the supporters write in their arguments. "Their neon signs offer the false hope of a quick fix, but instead borrowers typically end up with 12 or more loans each year."
The new law gives borrowers more time to pay back loans, they continue, and helps to create more affordable small loans.
"Reckless lending hurts more than unsteady borrowers," they comment. "It puts a strain on our charities, increases demand for social services and undermines families and communities."
- A "no" vote, meanwhile, would allow the lenders to continue operating under the prior law.
The maximum loan amount from a payday lender would continue to be $800, and there would be no minimum repayment period.
Check cashing lenders could continue to charge rates and fees and interest amounts exceeding 28 percent.
Opponents of the referendum call themselves the Committee to Reject HB 545, and they also have filed their arguments with the Ohio Secretary of State's Office. They believe people have the right to make their own economic decisions. Because the new law limits consumers to four short-term loans per year, they contend the regulations deny consumers access to other affordable choices.
The opponents also are concerned the database requirement infringes on the personal privacy of those needing short-term loans.
"Payday advances are a sensible credit option," the committee writes in its arguments. "They cost only $15 per $100 borrowed," it states. " By comparison, banks charge $29 for overdrafts and $37 for late fees on credit cards. Other fees can be as high as $57."
The supporters of the referendum, meanwhile, place the percentage costs on a short-term loan at 391 percent. This occurs if the short-term loan is left unpaid over a period exceeding one year, and additional fees are tacked on every two weeks.
Ohio Rep. John Domenick, D-Smithfield, was among the few state lawmakers voting against the payday lender legislation passed this year by the Ohio General Assembly.
He said he did this because of the large number of people who called him saying they had no other places to go but to payday lenders when they needed a small short-term learn for a family emergency. Typically they borrow $100 for a two-week period, and pay back $115, he said.
Domenick noted no one contacted him saying that more regulation was needed for short-term lenders. There are more payday lending operations per capita in the 95th House District that elsewhere in the state, Domenick noted.
"There are really no alternatives for people who need this lending," he said. "They have nowhere else to go because the banks won't lend them the money."
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CaseyM
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11-20-08 2:27 PM
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Here are some details of Fifth Third banks’s payday lending “alternative.” TERMS: · Credit limit is based on total of monthly direct deposits (maximum of $500 or half of total monthly DD-whichever is less). · Fee is $1 per $10 borrowed · A payment towards the advanced amount & fee is automatically made when the bank receives your next DD. The bank will pay off any balance owed, up to the deposited amount, on the day of the deposit. If the advance is not paid in full prior to 35 days after the advance, the remaining balance will be deducted from the checking account. The advance is paid automatically from the customer checking account when the next direct deposit hits the account, making the loan term anywhere from 1 to 35 days. The APR varies greatly based on the loan term, ranging anywhere from 3,650% to 104% APR." WHAT??? Are you kidding me?? 3650 PERCENT?!!!! Unbelievable
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PaydayLendingRep
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11-05-08 4:20 PM
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Rep. Domenick said it perfectly. The opinions of millions of hard-working payday advance customers have been lost in the debate over payday lending. Their voices are overshadowed by critics who have never actually used the service. Our customers are real people who use payday advances to solve real problems. Prohibiting payday lending only forces consumers to use the other, more costly short-term credit products available, such as overdraft protection, late fees on credit cards and other bill payments and off-shore Internet lending. CFSA members want customers to use payday advances wisely and want the service to be a solution for those who need low-dollar, short-term credit. A payday loan may not be the best choice in every situation, but that's no reason to eradicate it completely. There is still a need and a demand for this service. CFSA promotes laws and regulations that protect consumers while preserving their access to credit options.
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FormerOhioValleyResident
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11-03-08 8:54 PM
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I'm sorry, there is just no debating you. You are obviously blinded by the fact that you work in the industry. The whole point of me bringing up the CFSA is because you said the facts were on the CFSA site and not Advance Americas. The same people run both organizations.
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CaseyM
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11-03-08 2:56 PM
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So he has a vested interest in CFSA? So what??? Do you feel that way about others that start organizations that may benefit their Industry... or is just PD Lenders? BTW--- This issue is so much bigger than PD loans. It's about personal accountability, responsibility and the OGA restricting viable financial options for Ohioans. Financial Freedom of choice is a BASIC right! VOTE NO on 5--- VOTE NO on 5!!
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FormerOhioValleyResident
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11-03-08 2:25 PM
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He's not profiting from trying to establish an organization to oversee the industry? Are you kidding me? Seriously? He established the organization to try and keep the government out.
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CaseyM
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11-03-08 11:12 AM
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Who cares? He's not profiting from trying to establish an organization to oversee the industry. And this isn't about him. This is about preserving financial options for Ohioans!! **NO on 5!**
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FormerOhioValleyResident
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10-31-08 10:01 PM
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Isn't it obvious?
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CaseyM
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10-31-08 11:36 AM
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So... why does it matter who started CFSA?
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FormerOhioValleyResident
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10-30-08 4:00 PM
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And who started the CFSA, old “Billy” Webster IV, chairman Advance America. I was with the company when he rolled out the CFSA.
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YesOnIssue5Ohio
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10-30-08 12:26 PM
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I hope we pass Issue 5. We need to regulate the pay day industry - all they care about is their own profits. Let's make sure they treat their customers fairly and charge reasonable interest rates. Yes on Issue 5!
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CaseyM
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10-30-08 10:37 AM
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No those FACTS ARE NOT from Advance America's website. They are from CFSA's site. Regardless, they are TRUE & ACCURATE!!! Vote NO on 5 in Ohio!!!
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SphinxRising58
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10-30-08 9:13 AM
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CaseyM: You brought up a great point, that most do not retain a " safety net " incase of some unforseen event, which we all face eventually. It is hard to keep some money in the bank ( just incase ) for some when there are so many nice things one wants, but with a little self disclipline, it can be done, do without & buy only when you can really afford something. When I was single, not having a safety net was no big deal, as I had only myself to worry about, & like a cat, I always land on my feet eventually, but now that I have a spouse & child, things are not so easy, as I have to make sure they do not suffer. That is why we always leave some funds in the bank for that rainy day, & as for all that nice stuff, it can wait until we can really afford to purchase it.
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FormerOhioValleyResident
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10-29-08 7:15 PM
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Those FACTS are from Advance America's website.
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ElmGroveMan
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10-29-08 1:44 PM
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really does not concern me but what about personal resonsibility. If these dumb whitted people want to throw their money away that is fine but when they forclose, default on loans, etc. We the American people need not bail them out or give them welfare.
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CaseyM
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10-29-08 9:37 AM
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ACTUAL FACTS — “In truth, the typical payday advance customer represents the lion’s share of America’s middle class. A typical payday loan customer is a hard working, family raising adult who does not have savings or disposable income to use as a safety net when an unexpected expense occurs." 1) The majority of payday advance customers earn between $25,000 & $50,000 annually; 2) 68% are under 45 years old; only 4% are over 65, compared to 20% of the population; 3) 94% have a high school diploma or better, with 56% having some college or a degree; (Consenting Educated adults) 4)42% percent own their own homes; 5) The majority are married & 64% have children in the household; 6) One hundred percent (YES--100%!!)have steady incomes & active checking accounts, both of which are REQUIRED to receive a payday advance.” (PD Facts) VOTE NO on ISSUE 5
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CaseyM
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10-29-08 9:31 AM
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EllisWyatt-- "I do not think Payday lenders should close up shop. I am merely pointing out to you that most of your customers spend their free time watching "Springer" and plotting ways to make a quick and easy score. They all have lawyers on speedial and, most likely, a friend or family member who has won a $1,000 slip and fall settlement." WOW! Talk about making HUGE generalizations. Are you saying that this is a factual & proven statement or is it merely your opinion? Do you have a clue about who the average PD customers are? B/c you are so WAAAAAY off base it's not even funny! This kind of thinking just perpetuates more "myths" about PD lenders and the industry. It's despicable VOTE NO on ISSUE 5
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CaseyM
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10-29-08 9:24 AM
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Joanie1982-- just b/c your friend had a bad experience does not mean ALL PD lenders should be banned. If what you say is true, your friend should absolutely file a BBB complaint and have that lender investigated for failing to follow state law. But to rationalize that b/c of one experience all PD lenders are like that is rather sad. B/c it simply isn't true!! Is your friend an adult? Did she make the decision to get a PD loan? Did someone force her to do this? If she thought she wouldn't be able to repay as agreed, she had a lot of nerve getting one in the 1st place. I had a horrible experience at my local bank, so should we ban them merely b/c of my complaint??? NO!! I also have had a heckuva time with Home Depot and some damage they caused while installing an applicance and overcharging me. Im not advocating we close all the HD stores or better yet all the home improvement stores. Which is EXACTLY what you are suggesting!!! VOTE NO on Issue 5!!
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SphinxRising58
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10-29-08 9:17 AM
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Joanie1982: Anyone who stay in-debt to a payday loan company for three years clearly cannot manage their money so I would place some of the blame where it belongs, with your friend. The trouble with loans is that you have to pay them back, but many people try to rob Peter to pay Paul so they can retain some money for what they want, & that is how you end up in the hole fast. Not too long ago, I lost my job, ran arrears in my rent & bills, got another job, & do you think I enjoyed handing out $1,200 in cash from my pay checks ? No, but I owed the money & it had to be paid back so I did without until my bills was all paid off, & not once did I have to make use of a Pay Day office. People have to start learning to live within their means & stop trying to keep up with the Jones.
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SphinxRising58
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10-29-08 9:16 AM
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Joanie1982: Anyone who stay in-debt to a payday loan company for three years clearly cannot manage their money so I would place some of the blame where it belongs, with your friend. The trouble with loans is that you have to pay them back, but many people try to rob Peter to pay Paul so they can retain some money for what they want, & that is how you end up in the hole fast. Not too long ago, I lost my job, ran arrears in my rent & bills, got another job, & do you think I enjoyed handing out $1,200 in cash from my pay checks ? No, but I owed the money & it had to be paid back so I did without until my bills was all paid off, & not once did I have to make use of a Pay Day office. People have to start learning to live within their means & stop trying to keep up with the Jones.
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Joanie1982
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10-28-08 11:26 PM
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These places are nothing better than loan sharks wearing skirts. A friend of mine was really taken for a ride by a local payday lender. What started out as $150 went into $350 loans. What made me want to vomit was how they lied to her the one time she told them she needed an extension. (This was before the loan was due. ) When she told the people there, "Well, but it was on the news, that you have to offer me an extension if I request it," the ladies there told her "We don't don't extensions at OUR place." A few weeks later, she contacted a district manager and it was not until she told the store workers that she had spoken to the distict manager about getting a loan extension that they admitted they did indeed offer this service. Two weeks after finally getting an extension, she was able to quit using them for good. How long did it take? Three years. Three years! Be a humanitarian, and vote Yes on Issue 5.
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EllisWyatt
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10-28-08 6:31 PM
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CaseyM I WAS being sarcastic but you raise a good point. Businesses HAVE to practice defensive commerce. Why does everything you buy come with a warning? "Do not drink Drano or stick your hand into the socket". This is because some moron, somewhere, once downed Drano or stuck their finger in a socket. A company was sued and forced by their insurance company to settle. Then, the insurance company & the lawyers force the company to label everything. If 300% interest rates are permissible, why is loan sharking illegal? I do not think Payday lenders should close up shop. I am merely pointing out to you that most of your customers spend their free time watching "Springer" and plotting ways to make a quick and easy score. They all have lawyers on speedial and, most likely, a friend or family member who has won a $1,000 slip and fall settlement. Be forewarned-when Obama is elected, companies will pay-higher taxes, higher labor costs & higher goods and legal
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richardwhee
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10-28-08 1:32 PM
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That should be "15%-400%, makes no difference"
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richardwhee
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10-28-08 1:30 PM
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To All-- 15%-400%t makes the differene? Some say people should have the RIGHT to borrow. Well, Look at the financial mess this country is in today because people have the RIGHT to over charge on their cards, buy a 400K house on a small salery and not make payments. Then scream when the house is repossesed and their credit cancelled.
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FormerOhioValleyResident
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10-28-08 12:47 PM
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If you do work in the industry, take a look at your own paperwork. It should all be right there, unless your company is breaking the law.
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FormerOhioValleyResident
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10-28-08 12:44 PM
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If you do work in the industry, just as I used to. You should know why they say its a fee, because it's NOT THE INTEREST RATE. The interest rate is the 400%, just like people have been saying. I'll say it again, you should REALLLLY look into that finance class.
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