ELYRIA — Payday lenders are exploiting borrowers in Lorain County and need to be stopped, according to the Ohio Coalition for Responsible Lending.
The coalition met with editors and a reporter at The Chronicle to discuss the boom of the payday lending industry and pointed to the increase from one location in 1996 in Lorain County to 30 a decade later as a good indicator of how big the problem has grown. The group supports recent legislation introduced to cap the interest rate that such lenders can charge.
“It’s a plague,” said Social Action Director Patrick O’Bryan of the Catholic Action Commission of Wayne, Ashland, Medina and Wooster. “(Payday loans) are ravishing the people who need it the most.”
Payday lenders offer short-term, high-interest loans against future paychecks, and seek borrowers with a bank or checking account and some kind of income or government benefits, the coalition said. \Borrowers typically pay $15 to borrow $100 for two weeks — an interest rate of 391 percent over the course of a year.
“It’s a simple solution for people that are desperate,” O’Bryan said. “But if you don’t have money to begin with, how are you going to have the money to pay it back two weeks later?”
State Rep. Matt Lundy, D-Elyria, has teamed up with Rep. William Batchelder, R-Medina, to support legislation calling for a 36 percent interest rate cap on payday loans.
Although discussions and terms still need to be worked out, Lundy said it’s important for the payday loan industry to know that the state has some concerns about the way its lenders are doing business.
“You can’t really legislate financial responsibility,” he said. “But we can legislate the industry to responsibly lend that money to consumers.”
Contact Stephen Szucs at 329-7129 or firstname.lastname@example.org.
*In 2006, there were 1,562 payday lender locations in Ohio, up from 107 in 1996.
*Ohio has more payday lending locations than McDonalds, Burger King, and Wendy’s restaurants combined.
*86 of 88 Ohio counties have at least one payday lender location.
*Borrowers pay the equivalent of 300 percent to 400 percent on these loans.
*Ohio recently changed its payday lending regulations, thus raising the maximum level of payday loans from $500 to $800.
*Payday lending has become a $40 billion industry nationwide.
— Ohio Coalition for Responsible Lending