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Payday loan industry feels repercussions of Issue 5
Bob Carroll
Issue date: 11/21/08 Section: Front Page
Payday loan businesses across Ohio are suffering after voters approved Issue 5 Nov. 4.
The issue approved HB 545, which decreased the payday loan industry's annual percentage rate from 341 percent to 28 percent.
According to Jeff Kursman, spokesman for Check 'N Go, 36 of Ohio's 71 Check 'N Go stores will close in upcoming months.
HB 545, or the new Short-Term Lender Law, was supported by a decisive 63 percent of voters on Election Day, presenting payday loan distributors-such as Check 'N Go-with cutbacks in both the APR rate and the maximum amount of money that can be borrowed with a single loan.
Before HB 545 was passed, lenders could offer a maximum of $800 with a single loan. Now, state lenders may only grant $500 per loan, and must allow borrowers at least 30 days to pay back the loan.
Kursman said the decision to close the stores was a re-evaluation of their customer base.
"We looked at the overall performance of the stores and determined, quite frankly, where our customers are," Kursman said.
However, while changes are taking place in the industry, supporters of Issue 5 are hesitant to believe the industry will fade.
Susan Acker, spokeswomen for the Ohio Coalition on Homelessness and Housing in Ohio, has been a supporter of Issue 5 since its inception, and said the situation is more complicated than voters have been led to be believe, and said the loan industry is adapting to the changes.
According to Acker, all payday loan businesses label the loans they offer as products. These products are now being changed by the loan industry to skirt the restrictions of HB 545.
"What we do think will happen is the industry will create new products, but they are only a wolf in sheep's clothes," Acker said.
Acker said payday lenders are able to change the provisions of loans so they fit under a different category of Ohio's financial law. Currently, all short-term lenders in the state adhere to laws set forth under the Ohio Check-Cashing Lender Loan Act.
The issue approved HB 545, which decreased the payday loan industry's annual percentage rate from 341 percent to 28 percent.
According to Jeff Kursman, spokesman for Check 'N Go, 36 of Ohio's 71 Check 'N Go stores will close in upcoming months.
HB 545, or the new Short-Term Lender Law, was supported by a decisive 63 percent of voters on Election Day, presenting payday loan distributors-such as Check 'N Go-with cutbacks in both the APR rate and the maximum amount of money that can be borrowed with a single loan.
Before HB 545 was passed, lenders could offer a maximum of $800 with a single loan. Now, state lenders may only grant $500 per loan, and must allow borrowers at least 30 days to pay back the loan.
Kursman said the decision to close the stores was a re-evaluation of their customer base.
"We looked at the overall performance of the stores and determined, quite frankly, where our customers are," Kursman said.
However, while changes are taking place in the industry, supporters of Issue 5 are hesitant to believe the industry will fade.
Susan Acker, spokeswomen for the Ohio Coalition on Homelessness and Housing in Ohio, has been a supporter of Issue 5 since its inception, and said the situation is more complicated than voters have been led to be believe, and said the loan industry is adapting to the changes.
According to Acker, all payday loan businesses label the loans they offer as products. These products are now being changed by the loan industry to skirt the restrictions of HB 545.
"What we do think will happen is the industry will create new products, but they are only a wolf in sheep's clothes," Acker said.
Acker said payday lenders are able to change the provisions of loans so they fit under a different category of Ohio's financial law. Currently, all short-term lenders in the state adhere to laws set forth under the Ohio Check-Cashing Lender Loan Act.
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