The Ohio Senate is introducing changes to a payday lending crackdown that passed the House by a big margin. Supporters of the legislation say it will help shutdown predatory lending and a cycle of debt.
The Senate's changes raise the maximum payday loan amount to $1,000. The bill also caps the principal and fees on those loans at 7 percent of the borrower’s monthly income, and says total costs – meaning fees and interest rates – cannot be more than 60 percent of the original loan.
Ted Saunders, CEO of Community Choice Financial – the parent company of CheckSmart – says the changes end up hurting the payday lending industry while favoring credit unions.
“You notice there’s no prohibition on charging customers any other fees if you’re a banker credit union, but I’ve noticed in here that I, as a licensed check casher, if I want to deliver this loan in the form of a check, I’m capped at $10,” Saunders says. “Why me?”
Supporters of the original, tougher bill, say they’re O.K. with these changes and still want to see the legislation move forward. HB 123, which passed the House by 71-17 in June, would have imposed a strict 28 percent interest rate cap.
Ohio boasts the highest payday lending interest rates in the country: Borrowers pay an average of 591 percent annual interest.
The Ohio Senate plans on voting the bill out of its chamber on Tuesday.