Payday Lenders to Ohioans: Screw You!

In spite of all the money payday lenders spent to prevent it, Ohio Issue #5, a referendum on the November 4, 2008 ballot in Ohio, passed with 63.6 per cent of Ohio voters voting for the issue which capped Ohio payday loan industry's interest rate at 28 %. The capped rate prior to this was 391%. Ohioans were confident that after that the payday lenders would not be permitted to charge those who needed such loans the same usurious rates these lenders had in the past.

But more than 1,000 stores now have obtained licenses to issue short-term loans under different laws that permit higher rates, according to a report by the Housing Research and Advocacy Center in Cleveland, which has worked to lower interest rates.

Using the Mortgage Loan Act, some of these lenders charge interest and fees of $26.10 on a 14-day $100 loan, which amounts to a 680 percent annually.

This practice becomes all the more obscene since many Ohioans are still suffering from the "Great Recession" and are trying to "hang in there" by borrowing from these payday lenders.

Some state legislators are proposing a second round of legislation that would require these loan sharks to abide by the intent of the referendum approved by a large majority of Ohioans. But it is important that the legislature knows that we are aware of what's going on and we expect them to enforce the intent of Issue #5.