Payday lenders` high rate won`t be on Ohio ballot
Associated Press
COLUMBUS — Payday lenders won an argument with the Ohio Ballot Board Thursday that they couldn’t win with the Legislature — that payday loans shouldn’t be described using the high annual percentage rate that has come to define the industry.
The panel that decides how ballot issues are worded agreed it would be misleading to tell voters that payday lenders would be able to charge rates and fees equivalent to 391 percent annually if part of a new law is repealed. The omission of the high annual rate, which the federal government recognizes, was a significant victory for payday lenders in their ongoing attempt to fight the enactment of one of the strictest payday lender laws in the nation.
The back-and-forth over the complicated payday issue forced the Ballot Board to postpone work on a separate issue that would ask voters whether they want many Ohio businesses to be required to give full-time workers seven paid sick days each year.
The board approved wording for another issue asking voters whether they want a casino in Clinton County in southwest Ohio. Signatures to place the casino and sick days issues on the ballot are waiting approval from Ohio Secretary of State Jennifer Brunner.
If the payday industry gathers enough petition signatures to challenge the law restricting its business, the referendum that will be presented to voters on the November ballot will contain no mention of 391 percent. Instead, it would tell voters that if they reject a portion of the law restricting the industry, payday lenders would be able to charge rates and fees that “substantially exceed” a 28 percent annual rate. The 28 percent is the cap placed in the law approved this year by the Legislature.
The lenders have long argued that their product is a short-term loan that shouldn’t be evaluated using a long-term measure.
Bill Todd, an attorney for the payday industry, said the measure of an annual percentage rate shouldn’t be applied to loans that are generally two weeks long, and require the customer to pay back $115 for $100 borrowed.
“All I know is when I am a borrower, I know what I borrow and I know what I want to pay back,” Todd said. “And if those are the two things that are important to me, all this fancy gobbledygook … doesn’t really help me. I’m trying to borrow money.”
Opponents of the payday industry were unhappy with the Ballot Board’s decision because they said it didn’t provide an “apples-to-apples” comparison between what lenders could charge if the law stood or if it was repealed.
The Board decided to include the 28 percent figure in the ballot wording because it was defined in the law approved by the Legislature and signed by Democratic Gov. Ted Strickland.
“They failed in what they said they wanted to do, which is a clear and concise statement for the vote,” said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio, which is fighting the repeal of the law. “If you have a calculator and a copy of the Revised Code, you might figure out what this thing means.”
Faith and other opponents of the payday industry were also upset that a “yes” vote on the referendum would support the crackdown on the industry, while a “no” vote would enable payday lenders to return to business as usual. They preferred to be on the “no” side because voters historically have been more likely to pick that option when voting on ballot issues.
Payday lenders still have obstacles ahead, including gathering the necessary number of signatures. Strickland, Republican House Speaker Jon Husted and Republican Senate President Bill Harris have announced they will be campaigning against the industry.
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Filed by Associated Press August 15th, 2008 in Local and State.
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Payday lenders thrive on poverty. They are scum. They give money to drug drealers and addicts. They bring poverty and TRASH to any neighborhood that they are in. F the payday lenders. If you’re put out of a job -SORRY! guess if you like working for scummy companies go work for Walmart.
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wow… guess someone used the payday lenders without READING the fine print…. and probably got fired from Wal-Mart.
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Maybe the people who get laid off from their payday lending jobs can just go to a payday lender for a loan, since they’re such a great deal… Oh wait.
I’ll feel about as sorry for them as all the telemarketers who lost their jobs when the National Do Not Call Registry went into effect. Waah waaah, we can’t ruin people’s lives anymore!! :’-(
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Miss Beth,
You must really hate anybody that manufacturers 40oz’s, Black N Milds, DUBs, Cadilacs, and Rap music. Did I miss anything?
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is it just me, or is everyone that comments here ignorant?
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Its just you.
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there are alot of companies that as you say “thrive” on poverty. drive to pepper pike or beachwood and tell me how many auto parts stores you find there. you wont find very many because people there do not fix their own cars. they take them back to the dealers. where on the other hand you see them here on every corner. with this in mind should we shut down all auto part stores as well?
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Big T,
You forgot to mention rims and sammiches.
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Silverdud -Apples and oranges. Auto part stores are not charging the exorbitant interest that payday lending stores do.
A payday loan is a small-dollar, short-term loan with fees that can add up to interest rates of almost 400 percent. They’re generally taken out when the borrower is caught short on cash and promises to pay the balance back next payday.
If it sounds like legal loan-sharking, it’s not. “Loan sharks are actually cheaper,” said Bill Faith, a leader of the Ohio Coalition for Responsible Lending.
Jim Rokakis, treasurer of Cuyahoga County, which includes Cleveland, said, “I’ve been to [foreclosure counseling] sessions where almost everyone raised their hands,” saying they had payday loans.
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he said DUB’s. you have to get with the lingo.
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first of all payday loans did not cause the foreclosure crisis. second of all which is better, paying your bank for 5 overdraft fees at $30+ each or borrowing $100 to cover your checking acct. and avoiding the overdraft fees. borrowing the $100 will only cost you $15. if you figure out the banks APY for overdrafting your acct. by a couple dollars it is well over 3000%. now that is crazy.
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No it did not cause the foreclosure problem, but it does not seem like it is helping either.
And second of all, how about not overdrafting your bank account in the first place. Responsible people do not overdraft, irresponsible people do and then they go to this payday lending to cover the overdraft and cannot repay that loan or they will overdraft the bank account again.
Comparing it to a auto parts store, come on now!
Anyways, good riddance.
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“Responsible people do not overdraft, irresponsible people do and then they go to this payday lending to cover the overdraft and cannot repay that loan or they will overdraft the bank account again.”
there is an idiotic statement if i have ever heard one. unforseen circumstances do come up. in a perfect world everyone would have large amounts of money in a savings account to absorb financial hardships. the majority of people live paycheck to paycheck these days and if something like a hotwater tank blows alot of people dont have liquid funds to pay for it. no matter what type of income people make these days it seems that saving has gone out the window. i know a guy who makes 6 figures a year and just had his daughters ford focus reposessed because he could no longer afford the payments. is a payday loan going to help him? no. he obviously has trouble managing money. but that single mom who has a sick child and needs a prescription may not be able to afford it without the help of a payday lender. it should never be the governments responsibility to tell us how we can and can not spend our money.
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Silverdud- Unforeseen problems do arise but I guess by your statements you think it is okay to bounce checks knowing that you can cover the overdraft with the payday lending loan.
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“Miss Beth,
You must really hate anybody that manufacturers 40oz’s, Black N Milds, DUBs, Cadilacs, and Rap music. Did I miss anything?”
Trash is multi-colored: Black, White, Tan…doesn’t matter.
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“Did I miss anything?”
Kool smokes?
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when did i say it was ok to bounce a check??? you are the one looking at the payday lending situation with blinders on. i am merely looking at it from both sides. in the age of the “electronic” transaction it is easy to overdraft an account no matter how careful you are. things are being deposited and withdrawn from an account electronically on a daily basis. what happens when you forget about that magazine subscription renewal that hits your acct. once a year. overdrafts happen to everyone at some point in time. nobody is perfect and mistakes do happen. i belive somebody proposed they limit the amount of loans one can recieve in a year. this is probably a better idea than doing away with it completely. that way it is available when needed but can not be abused to the point you are taking out a loan everyweek to repay the one from the previous week.
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Dan S.- Changed to Newports! Everyone else, get off the subject. These folks DO NOT have bank accounts, so they don’t bounce checks, they don’t have credit cards, which by the way, are over 28% interest in some cases.. If you don’t need their services, don’t go there. WHO CARES??
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“Did I miss anything?â€
Lottery tickets, NASCAR, cigarettes in general, baggy pants…
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johnbear, educate yourself before you speak please. everyone who gets a payday loan needs a checking account from an actual bank. the account is verified and personal information is updated every 6 months to ensure the borrowers are still in good standing with their bank.
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Blast!!! How did i forget the Lotto!!
Somebody answer this question: What is the purpose of a business?
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“What is the purpose of a business?”
Screw poor people, pollute the environment, kill kittens and puppies, and screw poor people some more.
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most people go in to business to MAKE MONEY!!!
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HAHA, front page of cnn right now.
http://money.cnn.com/2008/08/12/pf/raw_deal_overdraft/index.htm?cnn=yes
and we are worried about payday lending.
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DUD who claims to be SILVER - You defend the terminally stupid. Either that or you work at a Payday Loan. Some of these loan shark businesses only require a clear car title to issue a loan. No bank account needed. Your argument is mute on too many fronts. You tried using the sympathy angle with ’single mom who has a sick child and needs a prescription.” You can get prescriptions for $4 from a couple different places now. Who you defend are folks who don’t know how to handle money. Payday Loans, and the others of their ilk, do not thrive on poverty, but on greed and peoples need for instant gratification. Their inability to use common sense and wait until the next payday fuels their personal spiral of deepening debt.
I don’t feel sorry for the folks who get caught up in it. They are accountable for their level of responsibility, not I. The loan businesses can only stay open because of the great mass of the terminally stupid. With so many willing to be led to their financial demise, I can’t say I honestly blame loan shops for taking advantage of it. I knew humans were in trouble when they started buying rocks for pets back in the 70’s.
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ahhh it seems as if mr. miller has an education. i was starting to doubt there were any educated people here.
many prescriptions are $4 these days. but there are many others that are much more expensive. 8 weeks ago my daughter had an infection in her eye that would not go away. after trying several $4 anti-biotics, the doctor prescribed one that to my shock cost $180 and that was with my very good medical insurance coverage. when you are stuck making minimum wage, $180 is probably 2/3rds of ones paycheck. that is a hefty amount of money to come up with if you do not have a savings. you will notice in an above post i mentioned limiting the times a loan can be taken out. maybe 4 times a year would be a good number to start out with. that way when the extra help is needed it is there and this would also keep people from abusing the service. it seems to be a win - win.
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and as far as myself defending the terminally stupid……
jack bradley seems to be making a decent living at the same proffesion.
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SILVERDUD - You wrote, “and as far as myself defending the terminally stupid……
jack bradley seems to be making a decent living at the same proffesion.”
LOL That is why I could have never been a defense lawyer.
Many prescriptions fall into the $4 a script, but there are also many that don’t. Sounds like your daughter had one that wasn’t covered. The deductibles can be quite high. I sincerely hope your daughter’s eye is better.
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Silverdud- Limiting the amount of times someone can use this service is not a bad idea, and just to give two sides to this, this supports what you had stated earlier;
A paper by Donald Morgan, a research officer with the Federal Reserve Bank of New York, indicates that payday lending may be preferable to some alternatives. In two states where it was banned, he found, consumers were worse off.
They’re more likely to bounce checks, he found, which is more expensive than payday loans. Fees on bounced checks can carry an annual percentage rate of 1,000 percent.
I still disagree with the whole payday lending institution, I believe it does more harm than good.
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The people who need to use these services don’t generally have a savings account. They live paycheck to paycheck, or maybe they just got laid off from the local hospital and need help. I have met people who have used these services for not immediate gratification but a immediate need to get the car fixed so they can get to work. The problem then is when they do get paid the following week they are $30 bucks or so short, then they have to decide what they are going to pay. This results in a trinkle down effect and they have a hard time cathching up before the next calamity hits. Good luck to the people who need these services.
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I am (somewhat) in defense of the Payday lenders. I believe the products they offer should be much more regulated, and they shouldn’t be able to stick up tacky storefronts every mile and a half. However, it really is silly to compare a one or two week loan product with that of a mortgage or car loan. Yes, the APY is high- because they don’t pay over the course of a year. It really is like comparing apples to oranges- the products are simply not one in the same.
If payday lenders charged a measly 5% interest, the profit they’d make would be ridiculous. That’s like going to the dollar store and reselling your goods for $1.01. It’s a waste of time and wouldn’t provide enough revenue to keep the lights on in the facilities, let alone paychecks in the pockets of employees.
If people use payday lenders in THE WAY THEY WERE MEANT TO BE USED, and not as an EVERY DAY SOLUTION TO ONGOING FINANCIAL PROBLEMS, this would not be an issue.
Paying $115 for a $100 loan is well worth not losing your job over, say, if your car broke down and needed a minor repair and you had no money otherwise. It’s the people that continually come back over and over to take out these loans, even paying one loan off with another, that cause problems. They end up being burdens on the state, filing these in bankrupticies and debt consolidations.
There are many poor people in the world who do not have access to traditional credit like most of us do. For them, a payday loan may be the only solution to a problem. High APY or not, where does that leave them? With broken cars, losing their jobs because they can’t get there?
I understand, also, that these places might finance drug dealers and other ‘illegal’ activities. In reality, though, a drug dealer with decent credit could probably put stuff on a credit card. I don’t think an argument should even be made on that note.
Overall, the problem isn’t in the lenders product, but rather in the way their services are executed. Perhaps a minor alteration to the process would be a better way to fix it, as opposed to making it ridiculously hard for lenders to stay in business.
Maerd, also, excellent point on the bounced check fees. Not only are the APYs on those much higher, it’s also technically illegal to intentionally write a bad check. (If it’s between having a utility shut off and buying yourself two weeks to find the money to pay it, and you don’t have the option of a payday lending program, this is what many of the poor will turn to).
The system is broken, but there is no good way to fix it.
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I am very passionate about protecting our environment for future generations. If I put an initiative on the ballot to eliminate global warming, there’s no way I’d let my opponents wording of “climate change†into my measure.
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