Ohio lawmakers struggle with payday loan caps or changes - WFMJ.com News weather sports for Youngstown-Warren Ohio

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Ohio lawmakers struggle with payday loan caps or changes

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YOUNGSTOWN, Ohio -

An 2016 Pew Charitable Trust study states the interest rate for payday loans in Ohio is the highest in the nation with a loan of $300 costing $680 in fees and interest over five months. The annual percentage rate on average was 591 percent according to the study.

The study found the majority of borrowers are white females ages 25 to 44 without a college degree, followed by African Americans earning less than $40,000 a year, and men or women separated or divorced.

But use of payday loans cross every demographic.

"It's tempting to get a quick loan with just a checking account and job, but it is best to avoid that temptation" said a single mom, Christina Sarno. "At the time I had a toddler and a baby, and they promised me that in as little as 10 minutes I would be out the door. Who wouldn't want to get $200 in 10 minutes? I found myself in a revolving door situation taking out another loan, and eventually a title loan. I was only able to pay the interest, and then I lost my job. Me and my children ended up losing our home, our car and we found ourselves in a shelter. If I could go back in time, I would never take out a payday loan. People are often embarrassed to ask family and friends for help when they need money for diapers and necessities. They should ask or cut back and do without, take advantage of financial classes or help before they take out a high interest loan." 

U. S. Senator Sherrod Brown wants Ohio to put a cap on interest rates or give people up to six months to pay them back like Colorado does. Consumers would still get easy access to credit but save money. In Colorado three out of four borrowers paid the money back early.

In Ohio there, there could be some action on a payday lending cap this year, or stretching out the time to repay the loan.  

But Senator Brown said, "The payday lenders have a powerful lobby. I don't care if the state or federal government does it, but I know the state legislature in Ohio is pretty much bought and sold by the payday industry, the payday loan industry in Columbus."

Local state law makers, State Senators Sean O'Brien and Joe Schiavoni both say they will support common sense legislation to help people in Ohio.

State Representatives Glenn Patton, Mike O'Brien and Michelle Leopore Hagan, also say they will support legislation to help consumers.

Local lawmakers say in the past when a lawmaker-sponsored legislation to change terms of pay day lending was introduced, the legislation got one committee hearing as required by law, then never made it past that process. Republicans have had control of the Ohio House and Senate for several years.

The Pew Charitable Trust Study, which provides facts and information, could motivate lawmakers to act.

In the meantime, there are financial options other than payday loans if you’re in a bind.

"There are short term loans available at any financial institution locally," said Victor Russell, regional manager for Apprisen. "There is an opportunity to borrow money from a relative, whatever the case may be. Then, there is also an opportunity to save and make sure you have an effective emergency savings to fall back on."

Russell runs the regional branch of a non-profit agency that helps people get out of debt. "With time and planning it is possible to end the cycle of endless borrowing," he said.

We want to point out that what payday lenders charge is legal. The payday lenders we reached out to locally didn't want to talk.

Community Financial Services Association, a trade organization which represents payday lenders, did not return our calls for a comment or respond to our emails. Their website encourages people to know the interest rates before they borrow and states payday lenders help 19 million households a year. 

More Information:
Apprisen – Consumer Credit Counseling Service
3050 Elm. Rd. NE Suite 3
Warren, Ohio  44483
330-394-2227

Apprisen – Consumer Credit Counseling Service
6960 Market Street #104
Boardman, Ohio  44512
330-394-2227

Links:
US Senator Sherrod Brown contact office

Reducing the need for payday lending loans

Practical ways to make money to escape the payday loan cycle

Submit a payday loan complaint

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