Wednesday, October 3, 2007

Pay day loan lending companies in Ohio have expanded exponentially within the past 10 years and Hocking County has one of the higher concentrations of payday lending companies in Ohio, according to the Ohio Coalition for Responsible Lending.

Hocking County has 2.12 payday lenders per 10,000 residents ranking it the 8th in the state. The state rate is only 1.35 per 10,000 residents. In 1996, no payday lenders had storefronts in Hocking County. During the past 10 years, six payday lenders have sprung up.

“What’s astounding is the growth of the industry. There are more payday lenders than all the McDonald’s, Burger King and Wendy’s restaurants in Ohio combined,” Cathy Johnston, advocacy director from the Ohio Coalition for Responsible Lending, said. Ohio has about 1,562 locations state-wide.

Personal loan companies offer short-term, high interest loans given for a post-dated check for the amount of the loan and the addition of lender’s fees. The maximum amount that can be borrowed is capped at $800 in Ohio, but the interest rates companies can charge have no maximum amount.

Almost 400 percent APR can be charged for $500 borrowed, which would translate into $45 every two weeks for a $300 loan. An $800 loan with a $72.50 origination fee and $40 of interest at 367 percent totals $912.50 at the time repayment is due. Usual repayment dates are two weeks from the time of borrowing these online payday loans.

“This kind of rates on small loans is usury,” Johnston said.

Under Ohio law, cash loan lenders are technically classified as “check cash lenders” and are regulated by the Ohio Department of Commerce’s Division of Financial Institutions.

They are exempt from Ohio’s Small Loan Act and from state usury laws. Payday lenders with in-house collections are exempt from the federal Fair Debt Collection Practices Act.

Customers may take out one payday loan every 24 hours and Ohio law does not prohibit borrowers from taking out several loans from different companies at the same time, from getting a loan from one lender in order to pay another or even getting a loan from the same lender to pay off a previous loan.

Over half of payday lending revenue comes from people who take out 13 or more payday advances a year. Borrowers are not required to make proof they can repay a loan.

“They don’t care about your credit or if you can afford to repay it,” Miriam Murphy, homeownership coordinator of the Hocking Metropolitan Housing Authority, said.

“We’ve got to close the gap on the laws,” Johnston said.

Click here to read the rest of this article.

This entry was posted on Wednesday, October 3rd, 2007 at 3:09 pm and is filed under Ohio.