Posted April 30, 200817 yr These types of businesses will not be missed in many parts of the state. Payday loans to be slashed THE ASSOCIATED PRESS http://news.enquirer.com/apps/pbcs.dll/article?AID=/AB/20080430/NEWS01/304300024/ COLUMBUS, Ohio -- One of the nation's strictest crackdowns on payday lending set to pass the Ohio House Wednesday would slash customer charges to a fraction of current rates and limit borrowers to four of the short-term loans a year. Industry representatives say the proposal's cap of 28 percent annual interest undoubtedly would put lenders out of business. The businesses generally charge about $15 for every $100 borrowed on a two-week loan, which will be equivalent to a 391 percent annual interest rate. Under the 28 percent annual interest rate proposed, borrowers would owe about $2.50 for every $100 borrowed for two weeks.
May 1, 200817 yr Payday lending bill passes House BY JON CRAIG | [email protected] http://news.enquirer.com/apps/pbcs.dll/article?AID=/AB/20080430/NEWS01/304300129/ COLUMBUS – The Ohio House passed one of the toughest payday lending bills in the nation Wednesday despite last-minute political jockeying that nearly derailed it. The state legislation sets a 28 percent cap on annual interest and fees on payday loans, blamed for contributing to a steep rise in consumer debt, bankruptcies and home foreclosures in Ohio. However, there’s still time for lobbyists and legislators to change House Bill 545 as it gets debated in the Ohio Senate, starting next week.
May 1, 200817 yr I'm happy to hear about this and I have a family member (by marriage) that's a multi-millionaire because he started one of these companies ...
May 1, 200817 yr How about some more suggestions for stupid laws to protect people from themselves? Might be a new thread.
May 1, 200817 yr ^So you see nothing wrong with this industry, huh? Free Market, right! This country is in a mess right now due to irresponsible lending practices that DO take advantage of people who in reality are not ready, able, or in a position to pay back these loans.
May 1, 200817 yr Bill to crimp payday lenders House version sets 28% cap; now on to Senate BY JON CRAIG | [email protected] http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080501/NEWS01/805010336 COLUMBUS - The Ohio House passed one of the toughest payday-lending bills in the nation Wednesday despite last-minute political jockeying that nearly derailed it. The state legislation would set a 28 percent cap on annual interest and fees on payday loans, blamed for contributing to a steep rise in consumer debt, bankruptcies and home foreclosures in Ohio. However, there's still time for lobbyists and legislators to change House Bill 545 as it gets debated in the Ohio Senate, starting next week.
May 1, 200817 yr How about some more suggestions for stupid laws to protect people from themselves? Might be a new thread. We could make it a duel! You can come up with unscrupulous business ideas to make money by screwing financially illiterate people over, we will come up with nanny state laws to thwart you.
May 1, 200817 yr Its like drugs or abortion. All you are going to do is drive these people to go to loan sharks and get their legs broken when they can't pay. No, I don't believe that people should use these regularly, but in an emergency, $50 is a small price to pay.
May 1, 200817 yr How about some more suggestions for stupid laws to protect people from themselves? Might be a new thread. We could make it a duel! You can come up with unscrupulous business ideas to make money by screwing financially illiterate people over, we will come up with nanny state laws to thwart you. LOL!
May 1, 200817 yr 300+% is interest is quite crazy but i don't think anyone paid that kinda interest since it would be for a year and most payday loans are a couple of weeks or so. Ohio need to quit playing big brother. This is not worse than the strip law though.
May 1, 200817 yr Rob 'N Go's have been illegal in West Virginia for years. As someone with a financial background, I'd sure like to make a 28% APR (plus other fees such as check cashing, money wirings, bill pay and faxes) on a steady basis! Let's take a look at the quoted 391% Annual Percentage Rate (APR) from the first article. Since it's impossible to know how often this is compounded, to get an idea of what you actually pay when there is no compounding interval, you have to use the Effective Annual Rate (EAR). The loan stated in the article of $15 for every $100 for two weeks is a 16% interest rate (391% APR), while the new law would allow a 1% interest rate (28% APR). When converted to EAR, what people are actually paying, the rates are 4,692% for the 391% APR loan and still 1,329% for the 28% APR loan! This is still big money, so the private firms are still going to get rich. Meanwhile, publicly traded Rob 'N Go firms are going to see their share prices go deep in the crapper, especially if Ohio is one of their main markets. Rob 'N Gos screw poor people really badly. Not only do they take from what little money poor people have, but they provide an EZ-out for those not wanting to take on the responsibly of maintaining a real bank account. Part of growing up is learning to take control of your finances, yet we've got Rob 'N Gos allowing people to shirk this responsibility, which bleeds into the rest of their lives. Poor people don't trust the bank but they do trust the very Rob 'N Go that is strangling them! Jeez, at least pawn shops made people put up collateral.
May 1, 200817 yr ...and I bet those that use them have HD TV's, iPods, cell phones, high speed internet, cable TV with all the premium channels, and all the latest conveniences. But now they need a law to protect them from themselves.
May 1, 200817 yr ...and I bet those that use them have HD TV's, iPods, cell phones, high speed internet, cable TV with all the premium channels, and all the latest conveniences. But now they need a law to protect them from themselves. You sound just like my grandfather and father. Although, this time I have to agree.
May 1, 200817 yr From what you've said about them, I take that as a compliment! While I'm sure you agree with me quite often, you'd best be careful expressing that in public. Might do you irrepairable harm!
May 1, 200817 yr I always thought that a better bang for the Govt's buck (If they did want to help the little guy); is to provide 'free' classes on personal finance for anyone who wants them
May 1, 200817 yr I always thought that a better bang for the Govt's buck (If they did want to help the little guy); is to provide 'free' classes on personal finance for anyone who wants them I think it would better for banks to provide those types of classes and for it to be a part of schools curriculum
May 2, 200817 yr Payday officials: Bill would cost 6,000 jobs BY ALEXANDER COOLIDGE | [email protected] http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080502/BIZ01/805020356/1076/BIZ Roughly 6,000 workers at payday lending shops would lose their jobs if Ohio legislators enact annual interest limits of 28 percent as outlined in a bill that passed the Ohio House this week, industry officials said Thursday. Industry officials say the proposed law meant to alleviate consumer debt in Ohio would force payday lending shops to close their doors and force their customers to either bounce checks or turn to unregulated payday lending via the Internet. House Bill 545 is now headed for debate in the Senate next week. The outcome will affect lenders such as Mason-based Check 'n Go, which has also criticized efforts to cap fees as an effective ban on the industry.
May 2, 200817 yr Very good example about the bank fees! some of those charges are ridiculous especially when looked at as an APR.
May 2, 200817 yr Industry officials say the proposed law meant to alleviate consumer debt in Ohio would force payday lending shops to close their doors and force their customers to either bounce checks or turn to unregulated payday lending via the Internet. Hell, if you don't have a bank account or are living check to check, why in the world do you have cable/internet access? I say close them down, let the folks who lose their jobs!
May 2, 200817 yr Would those against this bill (and I am not completely sold either way on it), be more OK with local zoning that limits the density of payday lending places in a municipality. Because, let's face it, these things are killing the commercial sectors of many Cincinnati neighborhoods. Anyone been to Glenway Ave recently?
May 2, 200817 yr My biggest worry is that will drive some of the users of these places toward grey market versions of these places. Pawn shops might have a chance to gain some market share.
May 2, 200817 yr I always thought that a better bang for the Govt's buck (If they did want to help the little guy); is to provide 'free' classes on personal finance for anyone who wants them I think it would better for banks to provide those types of classes and for it to be a part of schools curriculum Already exists: http://www.wecofund.com/
May 2, 200817 yr Would those against this bill (and I am not completely sold either way on it), be more OK with local zoning that limits the density of payday lending places in a municipality. Because, let's face it, these things are killing the commercial sectors of many Cincinnati neighborhoods. Anyone been to Glenway Ave recently? I lived within a 2 mile radius of 2 of these stores 4 years ago. (Bridgetown & Glenway) Today, at that same locale, I have a choice of over 15. Unnecessary!!! I HOPE THIS CLOSES THEM ALL DOWN!!
May 4, 200817 yr I've been using the distribution of payday loan/cash advance places as an indicator of suburban areas that might be having economic stress. You'd be suprised how many of these are out in suburbia here in Dayton.
May 4, 200817 yr I've been using the distribution of payday loan/cash advance places as an indicator of suburban areas that might be having economic stress. You'd be suprised how many of these are out in suburbia here in Dayton. When seemingly they were previously exclusive to the urban areas?
May 5, 200817 yr Well, banks have long effectively been in the payday loan business through the extremely high fees charged for overdrafts, low balances, etc. Then there is the pawnshop route, etc. If I were a regulator, I'd focus more on the financial system as a whole, not one particular segment.
May 15, 200817 yr Cashland parent says it plans to close Ohio stores By Tim Tresslar Staff Writer Thursday, May 15, 2008 A payday lender that operates in Dayton says it expects to shutter 139 stores in the state in response to legislation that would cap interest rates on payday loans. Cash America International Inc., based in Fort Worth, Texas, operates under the Cashland nameplate. Company officials say the proposed law would squeeze revenues and make it difficult to operate here, prompting it to close stores. http://www.daytondailynews.com/b/content/oh/story/business/2008/05/15/ddn051508cashweb.html
May 15, 200817 yr I would close them also if I could only make $2.33 for every $100 I loaned out! Ridiculous law.
May 15, 200817 yr You know i went to an ATM yesterday. They charged $2.95 for the transaction fee. That's not fair. Everything is electronic now. Why don't they do something about the bank fee's??
May 15, 200817 yr How about the $30 fee a credit card co. will charge you for being one day late in payment? I would never use a payday lender, but I feel more hate towards credit card companies every month.
May 16, 200817 yr I think the payday lender regulation is a step in the right direction, but how about capping the interest rates credit card companies can charge? You'd think this would get some attention along with the mortgage crisis.
May 18, 200817 yr Right - the banks want pay day lenders fees for making _unsecured_loans_ to be lower than what banks charge to take your own money out of an ATM machine. Something's not right there.
May 18, 200817 yr This is a start: Feds Back Tighter Credit, Debit Card Rules Phantom fees, retroactive interest increases would be banned By Mark Huffman and Martin H. Bosworth May 2, 2008 The U.S. Office of Thrift supervision has endorsed a plan that would limit many of these "unfair and deceptive" billing practices that consumers are complaining about. The changes are significant. They would make it much harder for a credit card company to increase a card holder's percentage rate on an outstanding balance. It would also ban "double-cycle billing," the practice of calculating interest charges from the start of the previous billing cycle. For debit card holders, there's relief from overdraft fees. Under the proposed rule, consumers could opt out of a thrift's "overdraft protection" program. Under current rules, banks allow debit card transactions to go through when a customer has overdrawn their account, but tacks on a hefty fee. Many consumers have said it would be better if the sale were denied than to have to pay an overdraft fee. http://www.consumeraffairs.com/news04/2008/05/credit_card_rules.html
May 18, 200817 yr Although this press release is a couple years old, I figured I would post it because it is a good example of a program that can be developed as an alternative to the traditional payday lenders... In the Interest of Justice A professor and two local credit unions created ''StretchPay,'' which undercuts what payday lenders charge by nearly 80 percent. It's become a national model. October 4, 2006 - Brother Victor Forlani, S.M., a University of Dayton management lecturer, wants to put some payday lenders on notice. “We're going to be out there fighting you. Charging an excessive interest rate is wrong.” Forlani and two Dayton, Ohio, credit unions created StretchPay, a credit union advance alternative that undercuts what payday lenders charge by nearly 80 percent. Now, they've extended StretchPay to 11 other Ohio credit unions. The Consumer Federation of America says payday lenders charge an average of 195 percent to 1,092 percent interest on a $100, 14-day loan. Borrowing $250 a month for a year through StretchPay costs $75 compared to $450 at a payday lender, according to Bill Burke, president and CEO of DayAir Credit Union. http://www.udayton.edu/News/Article/?contentId=2145
May 18, 200817 yr frankly, I am surprised at the animosity towards this legislation. it is a clear win for consumers. there is no cure all for the financial industry, but incremental changes can do a lot of good. I look forward to every one of these horrible places going under. they are a horrible blight on the urban landscape.
May 19, 200817 yr I have been in situations in my life, where I would have gladly paid $30-40 for a $200 pay day loan to avoid overdrafts, late fees, etc. Because people can't handle the responsibility of only making it for emergencies, doesn't mean they may not serve a purpose. Can't protect people from themselves no matter how hard you try. Do you not think the criminal element will step in and make these loans? I'm sure the terms will be worse than the legal ones.
May 19, 200817 yr I always thought that a better bang for the Govt's buck (If they did want to help the little guy); is to provide 'free' classes on personal finance for anyone who wants them I think it would better for banks to provide those types of classes and for it to be a part of schools curriculum Working on that right now, as a matter of fact... :wave:
May 19, 200817 yr ADIOS!!! Check Into Cash closing Ohio outlets Business Courier of Cincinnati http://cincinnati.bizjournals.com/cincinnati/stories/2008/05/19/daily6.html?surround=lfn The payday loan chain Check Into Cash will close all of its Ohio outlets, saying it can't operate under the state's new payday loan interest cap. The Cleveland, Tenn.-based company said Monday it plans to close 93 stores in the state, including six in Greater Cincinnati, resulting in the loss of about 200 jobs. It is the first move in a likely series of closings by payday loan firms that operate in Ohio. Check Into Cash also operates three locations in Northern Kentucky that won't be affected by the law.
May 19, 200817 yr I think problem here is that while pay day lending places might be a fine last resort option, their bread and butter clients are the ones who are already trapped in a cycle of debt. There must be a friendlier (more Christian) compromise.
June 2, 200817 yr Strickland signs off on payday lending crackdown http://cincinnati.bizjournals.com/cincinnati/stories/2008/06/02/daily5.html
June 3, 200817 yr Bye Bye Check Into Cash, I won't miss those awful commercials. Too bad the company still exists...
June 3, 200817 yr 6000 jobs is alot of jobs to lose. Maybe they could have meet half way with the companies? But i don't like the part where you're only allowed 4 small loans within a short period. Does that include small loans from the banks too?
June 3, 200817 yr I would think someone at these payday loan companies has already started looking at ways to get around this, like huge one time fees per transaction in place of higher interest rates, or something to that nature.
June 3, 200817 yr ^ Yeah, as I mentioned earlier Rob 'n Gos are illegal in WV, but there was one on US 60E in Huntington that cooked up some way to do business.
June 3, 200817 yr This just happened to my youngest daughter. Talk about overly high fees, but this is considered legal! She thought she had $50 in her checking account, but only had $40. After the fact, we went thru her numbers, and confirmed where she made the $10 subtraction mistake. Knowing payday was Friday, she proceeded to use her debit card for 6 small purchases over a 2 day period that totaled only ~ $12. Then, she purchased gas for $35. Its hard to show the order of purchases, but on her online statement, all the small charges came in first. Online, it doesn't appear that she actually was overdrawn until the gas purchase, but since they all came in on the same day, Key bank was able to charge her $38 for each overdrawn purchase, plus some associated fees totalling another $60 for a grand total of $300+ for her $8 overdraft!!!! She of course can chalk it up to another lesson learned. I on the other hand, get to stew about it. Let's do something about these type of fees.
June 3, 200817 yr ^I had something very similar to that happen to me with my checking account at 5/3. I challenged the charges and was able to have them dropped. Even though it is difficult to prove/illustrate the order of purchases, but if you can throw some sort of doubt into their equation then they will most likely reimburse those fees...especially if you have a good track record with your account. I believe I was charged for something like $132 in fees plus the basic overdraft fee. Luckily I was able to get these all removed. I actually had it happened again a second time and was once again able to have the fees reimbursed. Sometimes they are just wrong...you just have to stand up and say that they are.
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