Report urges reduced usury rate for payday loans
Dayton Daily News - October 15, 2008
Dayton Daily News
COLUMBUS — The cost of payday loans is harmful to low- and middle-income working families, according to a new report from Policy Matters Ohio, a nonpartisan research organization.
Credit counselors surveyed about payday loans — borrowed by consumers as a short-term effort to pay debts — said they are concerned about the high interest rate on such loans and the number of clients who have several loans outstanding at the same time, Policy Matters Ohio said Wednesday, Oct. 15.
On average, those clients have payday loan debts of $1,000, the credit counselors said. Payday loan debt hinders a consumer’s ability to pay household expenses including housing and transportation costs, the counselors said.
Policy Matters Ohio said it surveyed 17 credit counselors who serve an area covering 28 of Ohio’s 88 counties.
The organization’s report recommends preservation of a bill the Ohio General Assembly enacted to cap the annual percentage rate of payday loans to 28 percent, down from prior annual rates of up to 391 percent.
The payday loan industry has submitted petitions in support of a ballot issue that would set aside that bill and allow the higher usury rates. The issue will be on the Nov. 4 ballot if Ohio determines there are enough valid petition signatures.
A “yes” vote on the ballot issue would limit lenders to the new 28 percent interest cap while a “no” vote would allow lenders to keep the 391 percent cap.