There are about 650 payday loan stores in Ohio, that’s 650 too many in my opinion. But pay attention to lenders!
“Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower does not need, want or cannot afford. www.debt.org/.
A new law on short-term loans (House Bill 123) is set to come into force this month. The goal is to help Ohioans stuck in the debt cycle when small loans swell with fees and interest, making repayment difficult. HB 123 bridges the exploited loophole while ensuring that borrowers will continue to have access to credit.
“Ohio will certainly have fewer stores offering payday loans, and none are expected to offer vehicle title loans,” according to a 2019 article in the Columbus Dispatch.
Under HB 123 (www.legislature.ohio.gov.), The Equity in Lending Act imposes requirements on loans:
Loans cannot exceed $ 1,000. Under the section of the law, payday lenders currently have no limit on the amount they can lend.
Costs and interest cannot exceed 60% of the initial principal of the loan and the interest rate is capped at 28% per year.
“If someone borrows $ 500, they will have to pay a maximum of $ 300 in fees and interest. Payday lenders have no restrictions today. Loans must last for at least 91 days – with the idea that consumers need more time than the standard two weeks that a payday loan center typically allows for repayment. An exception to this period is if the monthly payment does not exceed 7 percent of a borrower’s monthly net income, or 6 percent of gross income, ”according to Cleveland.com/.
The duration of the loan cannot exceed one year.
Borrowers cannot have more than $ 2,500 in outstanding principal on multiple loans. Each borrower must sign a written statement stating that they have no debt of $ 2,500, and stores must verify it.
The following provisions have been enshrined in law to assist consumers:
Borrowers have 3 business days to change their mind about the loans and repay the money, free of charge.
The borrower should obtain a copy of the terms and conditions of the loan. Total fees and charges should be disclosed “clearly and concisely”. The total amount of each payment and the number of payments must be included.
Lenders can no longer act as consumer service organizations, terminating vehicle title loans.
The lender must disclose if borrowers have any complaints, they can submit them to the Financial Institutions Division of the Ohio Department of Commerce. Address and phone number must be included.
Harassing phone calls from lenders are prohibited.
According to a 2019 Los Angeles Times article, “California payday lender pays consumers roughly $ 800,000 to address claims it steered borrowers into high interest loans and engaged in other practices.” illegal… California check-cashing stores also agreed to pay $ 105,000. in penalties and other charges in a consent order with the state’s Department of Business Supervision, which clamped down on payday loans and other high-cost consumer loans that critics claim to be predatory. www.latimes.com/.
Let’s applaud. “We are Ohioans for Payday Loan Reform, a group of like-minded Ohioans among consumers, veterans, businesses and faith communities, determined to fight for reforms to protect borrowers and boost the economy of our state. Payday loan reform will save hardworking Ohioans over $ 75 million a year. www.ohiopaydayloanreform.com/.
HB 123 sends the sharks to race. Congratulations to the citizens and the legislature of Ohio!
Scope: Melissa Martin, Ph.D, is an author, columnist, educator and therapist. She lives in Scioto County. www.melissamartinchildrensauthor.com. Contact her at firstname.lastname@example.org.