Big Payday Loan Victory in Ohio
The Ohio Ballot Board voted in favor of payday loan companies this week when they voted against interest related language that was to be placed on a ballot. The language would outline what could be charged on a loan, 390% or more. Anyone familiar with how a payday loan works knows that the cash advance is short term, so traditional means of calculating interest such as APR, don’t apply since most loans are paid back in 2 weeks. The panel concluded that allowing the language to be included was prejudicial.
Ohio Governer Ted Strickland (D) has been fighting to place restrictions on how payday lending companies do business along with the Republican run state legislature.
The panel also decided that it is up to voters to decide if they want to keep the 28% interest cap on their payday loans or allow the payday loan companies to repeal the reforms. While 28% sounds like a high interest rate, the loan is only meant to be 2 weeks in duration. The 28% cap makes it virtually impossible for payday lenders to conduct business in Ohio.
The real issue isn’t the interest rates that payday lenders charge for their loans, it’s why are consumers in such need of short term loans to pay for rent, avoid overdraft fees and missing payments on bills. Instead of dummying down the language on ballots, the legislators should focus on educating adults on properly spending and saving their money. If people had money they wouldn’t need the services of a payday loan company.
