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Payday Loans Law May Go to Voters
Via my local NBC news affiliate:
A payday loans industry group is considering a November ballot issue that would ask voters to repeal a new law that limits the interest rate charged by such lenders.
Columbus lawyer David Paragas is representing the Washington-based Community Financial Services Association in its fight against the bill signed by Gov. Ted Strickland on Monday.
It would cap annual interest rates at 28 percent, down from as much 391 percent charged currently.
If state elections and legal officials decide a petition is in order, backers would need to get signatures from 241,366 voters by Sept. 1 to put the repeal before voters.
Sounds like a great strategy to me. I'm sure voters would love to pay 391% interest as opposed to 28%.
Seriously. In what universe do these people live where they think voters will willingly force themselves to pay unconscionably high interest rates?
Comments (4)
I live in the world that sometimes and more often than not my paycheck as it is allows for no emergencies. Two weeks ago the brakes on my used car went out and I had no choice but to repair it. The cost was three hundred fifty dollars I did not have. So when I found myself unable to buy milk or gas this week because of the unforseen expense I went to sai payday loan establishment and was told I could not borrow the hundred dollars i needed because of the bill that Gov. Strickland signed. The problem with this bill is people are looking at the annual interest and saying OMG that is legal loansharking. The reality is these are not meant to be long term loans, they are short term, and if you use it the responsibly, then you pay exactly fifteen dollars on every hundred borrowed, that means that if I had been able to borrow the hundred right now then in two weeeks when I would have been caught up from the unexpected expense of the car repair, I could have paid back one hundred fifteen and been done. If I couldn't afford that then I could have continued until I got to a point where I could. These loans are meant to help people in the short term and for some have meant the difference from having no heat in the winter to buying groceries. It is not a perfect system but there has to be some personal responsibility and not just blaming the company. Many of these places because of the setup for short term loans simply cannot operate at the twentyeight percent intersest and will have to close their doors, that will be another six thousand unemployed people to add to our ranks.
June 6, 2008 6:31 PM | Reply | Permalink
its kind of hard for there to be "personal responsibility" when you borrow 100 dollars and have to pay back 400.
And if the only way you're business can survive is to charge criminally high interest rates, then maybe you don't have a sound business model in the first place.
June 6, 2008 6:47 PM | Reply | Permalink
btw, i have a friend who used to work at one of those places. He told me it was one of the most depressing jobs he had because every day he went to work he felt like he was ripping people off.
He ended up quiting.
June 6, 2008 6:49 PM | Reply | Permalink
again you are missing the point there are some people in this world myself included that have short term financial crisis. These are the people these places are set up to help, they are not meant for long term loans and if you have borrowed more than you can afford I guess that is your fault and not the companies. It's great if you have never found yourself in the situation that i described earlier but many of us are not as fortunate, but again if you use it the way it is set up than you are borrowing a hundred and paying back one hundred fifteen, not four hundred, the interest rate you quote is based on a year but it only applies for the two weeks of theloan. About a year ago my friend had borrowed five hundred and could not pay back the five hundred seventy five when it was time they allowed her to make biweekly payments until she paid the loan and they never charged more than the original seventy five dollar fee. Most of these companies are not the evil empire you assume they provide a service and they explain all of it up front including the fine print and the interest rates are posted prominently, they are indeed some people who get in trouble with these loans but they are the same ones who pay overdraft fees and minimum payments on their credit cards. If you are bad with your money then no amount af legislation is going to help you, but I re4peat there have been times when payday loas have been a lifesaver to me and others I know and I am upset that the Gov. has decided he knows how to handle peoples own personal finances better than they do. Perhaps he should put that much effort into the education crisis we are facing in this state or the fact that one company after another is closing it's doors. I voted for him on his promise to fix on funding education and healthcare in this state I'm still waiting.
June 6, 2008 11:12 PM | Reply | Permalink
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