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Payday lenders have abused Ohio borrowers for too long. The Ohio General Assembly and Governor John Kasich now have a chance to stop their unethical lending practices. And they need to take this chance in order to help Ohioans — especially those with lower incomes.
The Ohio State Senate approved the payday lending bill with minimal adaptations on Wednesday — a great decision, as they could have left it idle for their summer recess. The bill will now return to the House of Representatives.
The Senate’s recent changes included raising the maximum loan amount to $1,000, capping the borrower’s monthly payment at 7 percent of his or her monthly income, and limiting the total cost including fees to 60 percent of the original loan.
For over a year, the bill collected dust in the House Government Accountability and Oversight Committee following the resignation of Rep. Cliff Rosenberger (R., Clarksville) — a resignation due to an FBI investigation into the then-speaker’s alleged involvement with payday lending lobbyists.
Neither federal nor state attempts to control the astronomical interest rates have worked, leaving some Ohio borrowers financially strangled.
In 2008, Ohioans approved a ballot measure called the Short-Term Loan Act, which capped payday lender’s annual percentage rates at 28 percent and extended a borrower’s time to pay back these loans to 31 days. For the past 10 years, lenders have found ways around this law and continue to squeeze as much blood from as many stones as they can.
In 2016, the Consumer Financial Protection Bureau, the federal group that oversees payday lenders, set forth regulations that increased the length of time borrowers could use to pay back their loans. It also allowed borrowers to pay in installments instead of one lump-sum.
According to Pew Charitable Trust, the typical APR in Ohio for payday loans is 591 percent — the highest in the United States. Borrowers must also set aside 34 percent of each paycheck just to pay off their loan.
Keep in mind that, according to the February, 2018 Ohio Poverty Report, Ohio’s poverty rate is higher than the national average.
Cheney Pruitt, founder of payday loan company CashMax, said that House Bill 123 is the “death knell” of payday loaning businesses.
Yes, Mr. Pruitt, it is. Killing this monster has been a long time coming for Ohio.
If left in committee again, many more Ohioans might find themselves handcuffed by high interest rates.
The House of Representatives needs to pass this bill, Governor Kasich needs to sign it, and unfair payday lending must end.
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