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Payday loan industry feels repercussions of Issue 5
Bob Carroll
Issue date: 11/21/08 Section: Front Page
Dennis Ginty, spokesperson for the Ohio Division of Financial Institutions, said many payday lenders have applied to change the license of lending in which they currently operate.
"Of the 1,394 lenders in the state, the Division of Financial Institutions has received applications from 1,149 (lenders)," Ginty said.
Those applying to change their lending license, Ginty said, are moving to operate under the Small Loan Act and the Ohio Mortgage Loan Act.
Under the Small Loan Act, lenders can calculate interest on the loans they issue by charging a maximum of 25 percent on the entire loan, or 28 percent on the first $1,000 and 22 percent on the remainder of the loan up to $5,000.
Under the Ohio Mortgage Loan Act, lenders who make loans secured by real estate or personal property may charge an interest rate of 25 percent with no loan limits.
Both laws allow lenders to charge fees increasing the annual percentage rate.
Regardless, Acker said there was strong support for Issue 5.
"Our lawmakers made it clear that the outrageous interest charges on these loans that are charged to people who can not afford them is unacceptable, and the people who voted agreed," Acker said.
According to Rep. Tom Brinkman (R-34th district), other states have faced the same kind of payday loan restrictions, however these states haven't seen the industry die.
"I think that within a few years this industry will be back in Ohio," Brinkman said.
State Rep. Shawn Webster (R-53rd district), whose district includes portions of Butler County, said there are positive and negative parts to the issue.
"Even though I voted for the issue on the floor, I had some doubts on where things would go," Webster said. "I think all the nickel and dime-ing stuff is wrong and it should be handled consistently."
Webster said if payday lending is restricted in the state, then other areas must also be examined.
"Why do we do what we do to one financial sector, but not do that across the board?" Webster said. "(Payday lending) may be a symptom of the economic problems in our country, but it is only a symptom of a deeper-rooted problem."
"Of the 1,394 lenders in the state, the Division of Financial Institutions has received applications from 1,149 (lenders)," Ginty said.
Those applying to change their lending license, Ginty said, are moving to operate under the Small Loan Act and the Ohio Mortgage Loan Act.
Under the Small Loan Act, lenders can calculate interest on the loans they issue by charging a maximum of 25 percent on the entire loan, or 28 percent on the first $1,000 and 22 percent on the remainder of the loan up to $5,000.
Under the Ohio Mortgage Loan Act, lenders who make loans secured by real estate or personal property may charge an interest rate of 25 percent with no loan limits.
Both laws allow lenders to charge fees increasing the annual percentage rate.
Regardless, Acker said there was strong support for Issue 5.
"Our lawmakers made it clear that the outrageous interest charges on these loans that are charged to people who can not afford them is unacceptable, and the people who voted agreed," Acker said.
According to Rep. Tom Brinkman (R-34th district), other states have faced the same kind of payday loan restrictions, however these states haven't seen the industry die.
"I think that within a few years this industry will be back in Ohio," Brinkman said.
State Rep. Shawn Webster (R-53rd district), whose district includes portions of Butler County, said there are positive and negative parts to the issue.
"Even though I voted for the issue on the floor, I had some doubts on where things would go," Webster said. "I think all the nickel and dime-ing stuff is wrong and it should be handled consistently."
Webster said if payday lending is restricted in the state, then other areas must also be examined.
"Why do we do what we do to one financial sector, but not do that across the board?" Webster said. "(Payday lending) may be a symptom of the economic problems in our country, but it is only a symptom of a deeper-rooted problem."
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