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Payday lenders react to bill
TweetBy SHELBY SCHROEDER
Two of the largest companies plan to close their Ohio locations.
Many pay advance companies have announced they will close their Ohio operations after the Senate’s approval to cap loan rates last week.
Legislation approved Wednesday will cap the interest rates charged by so-called payday advance companies to 28 percent. Companies have said the rate is too low; supporters of the bill say reported lending rates upward of 390 percent worsen financial problems for borrowers.
Check Into Cash, a cash advance provider with eight locations in Trumbull and Mahoning counties, said it will close all 93 of its stores in Ohio. Judy Powers, company spokesperson, said the closings depend on whether the company can offer new services. Another payday lender, Cash America, also announced plans to close 139 of its Ohio lending sites in coming months.
Industry spokesmen estimate 6,000 employees of the payday loan businesses in Ohio, including 220 from Check Into Cash, could be terminated by year’s end.
Mike Dohar, the owner of four local Midwest Money Centers, said about 75 percent of his company’s revenue is derived from the payday loan business. His stores also perform check cashing and bill payment services.
Dohar said his clients, who are primarily lower income, will have few alternatives if payday loan centers close. He said remaining choices include asking a friend or family member for money, charging a credit card, bouncing a check or not paying bills at all.
“But then they’re going to shut your utilities off — is that a good choice?” he asked.
According to the Center for Responsible Lending, a nonprofit organization that seeks to protect individuals from bad loans, the majority of families taking out payday advances are caught in long-term debt. Additionally, the center states that short-term loan periods “ensures that cash-strapped borrowers will be unable to pay off their loan with a single paycheck,” creating more debt.
Dohar said that he and many others are unfairly portrayed as predatory lenders with outrageous lending rates. He said that he charges flat rate fees, rather than interest and that he arranges payment plans for people who cannot pay their bills on time.
Instead of eliminating lenders’ profits, he argued consumers should be educated as to how to properly use payday advances.
“There will always be people who abuse their freedom of choice,” he said. “[But] every time the government tries to protect the consumer from themselves, they’re really hurting them.”
Dohar said he’s unsure what will become of his stores.
Powers, from Check Into Cash, said the company will try to salvage its business but had no set plan yet.
“Hopefully we can come up with something,” she said.
Gov. Ted Strickland plans to sign the bill into law once he receives it from the Legislature.
Dohar said he expects the government will see more problems arise from the bill.
“In three months, they’re going to scratch their heads and go, ‘What are we going to do about this?’”
sschroeder@vindy.com
Comments
Governor Strickland needs to do the right thing for Ohio and veto HB 545. His veto would ensure that working families continue to have access to short term credit options and avoid devestating consequences for tens of thousands of Ohioans.
The payday lending industry is extremely important to Ohio’s economy. Our businesses contribute $250 million to Ohio’s economy, employ 6,000 Ohioans to whom we pay nearly $173 million annually in salaries and benefits, we occupy a total of 1,600 locations, for which we pay $77 million annually in rent. The ripple effect our business has on the state’s economy is tremendous—all of which is at risk with the passage of HB 545.
Inspite of all the resources that we have in order to have access to funds like payday loans, still people get desperate with money and do criminal acts such as robbery. On Thursday, December 4th, four thieves entered Harry Winston Jewelers' Paris store, armed, and robbed the store. Three of the four wore women's clothing, busted in close to closing time, and then went about ransacking the store in record time. The robbery was over quickly, but the shocking thing was the sheer amount that was made off with. The thieves, in a matter of minutes, made off with €85 million, or about $108 million of jewelry and watches. This makes for one of the largest diamond heists in history, and it only adds insult to injury as that very same store was robbed almost exactly one year ago. French authorities are beginning the investigation, but they say it isn't likely that the thieves will be able to sell the gems taken through traditional outlets because of the high profile of the heist. Also, the research had been done, necessary to commit the deed, because the robbers knew the employees' names. During hard economic times there is a marked increase in crimes like robberies, with some people desperate to hoard a little extra cash, but this is ridiculous. Jolly Old St. Nick ought to bring these punks a shovel full from the reindeer stalls for their stockings. If you have a hard time because of sudden expenditures, you can always get a payday loan – you don't have to rob anybody and you won't go to jail for getting one. Click to read more on http://personalmoneystore.com/moneybl...
Payday Loans Facilities are nothing more than scams. What people need to start to understand is that if you don't make enough money to pay for luxuries like cellphones and cable tv, then don't purchase them and get yourself into debt. If American idiots would learn to budget their income and not rely on credit for simple purchases and luxuries, then there would be no need for these glorified loan sharks to be in business. It sickens me that people are overspending and wasting money on things they want, not need. I say good riddance to these hacks, as it is one example of how small business takes advantage of people who have already made unwise financial decisions.
Keep it the way the people voted. These places are legal was to rip people off. I have always hated these places. They prey on the weak, and put them farther into a hole! Keep the cap! They have made enough money off the poor!
Payday lending is just legal loan sharking. It is a revolving door. Person comes in on Friday to pay off their loan, then come back on Monday to take out another one.
It is not that this bill is shutting all these people down. It is the greed from the executives that is making them pull out of Ohio. You have the choice to stay and work on a 28% cap on the interest. 28%! Don't blame the lawmakers, they are only protecting citizens. The only blame for these companies leaving are the companies themselves. Predatory lenders should be stopped. You want to do a service for Ohio, stay, but only charge 28% interest.