At the present moment the cost of payday loans and car-title loans in Ohio amounts to $500 mln annually, which is pretty a large amount. Recent research made by the Center for Responsible Lending proved that. However, they have also found that there appeared to be a shift in the sphere: more fees in terms of interest rates are now paid to car-title lenders than to payday lenders. This doesn’t change the fact that APRs are still amount to the same triple-digit numbers.
As of today, there are about 836 lending places in the state of Ohio and about half of them offer both type of short-term loans – car title and payday loans. These two are similar in some ways with the only difference is that car title loans are secured ones and they require a vehicle as a type of a collateral (that a person looses in case of non-repayment).
In 2008 lawmakers passed the law that capped interest rates at 28% with the attempt to lower the amounts for borrowers to repay; however, lenders found the way to go around the law.
At the present moment the bureau is trying to implement some new regulations for such lenders. The objective is the same – to try and cap loan rates and by doing so alleviate the stress of repayment for borrowers. They are also trying to put a limit to the number of loans that can be taken a time. The latter regulation presupposes a limitation of 90 days indebtedness a year with all the roll-overs in total.
The purpose that the Ohio Consumer Lenders Association tries to follow is a good and noble one – to make short-term lending environment easier and more affordable for borrowers. Thus, more attempts are made to not allow payday lenders going around the aforementioned laws.
A Financial Protection Bureau study in the spring found that, nationally, more than 60 percent of loans go to borrowers who have taken out at least seven loans in a row, each time incurring new interest rates and fees, and about half of the loans go to those taking out at least 10 consecutive loans.
In accordance with the recent Financial Protection Bureau study those borrowers who have already taken several laws in a row are more likely to apply for another one. The number of such borrowers amounts to 60% and there are many individuals who actually have about 10 loans like this behind their backs.
The discussion is still open and at the present moment as there are people like Rod Aycox, LoanMax Title Loans founder, who actually donated about $115,000 to the Republicans campaign in the course of the election cycle; and he is followed by the Ohio Consumer Lenders Association contributed $100,000 to the campaign that presupposed reformation of the Ohio’s legislative redistricting process. This means the money inflow from the sector that is expected to be closed and it is definitely the reason for payday loan question to be open and discussions to continue.