At the present moment the number of payday loan stores in the U.S. is really high – this is not news. Some compare this industry with fast food places, and, apparently, the former win in numbers.
The state of Ohio is one of the several that try very hard to regulate payday lending industry and decrease the risks that customers of such credit option have to face. Many other states seem to follow the lead to a different extent.
Payday loans have long been known for their short-term unsecured nature and for the benefit of easy access to fast cash. It is still, objectively, one of the fastest and most convenient ways to get some finances in case of emergency. However, the growing trend is that customers use these loans not for their initial purpose but for covering everyday and immediate needs – which leads to the problems mentioned in mass media and become in charge of payday loans bad reputation.
In accordance with the Consumer Financial Protection Bureau information, too many payday loan customers get trapped in debt due to the fact that they actually have to renew and roll-over their loans. Interest rates that are justified by the nature of a loan and can be excused when a loan is taken on occasion – in unplanned financial situation, rarely – become a very serious trouble when loan is taken too often and rolled-over several times. Final debt amount becomes excessive and people can’t deal with repayments smoothly. The Pew Charitable Trusts information on this account is quite elaborate – most people pay $520 eventually for a $375 loan.
In Ohio the laws become more and more stringent with regards to payday lending. The state has already passed a law that caps 3-digit number interest on loans; however, lenders have their business that they do not want to lose and they still find various ways to get around the law. Seems like the aforementioned measures haven’t yet produced the expected effect and most lenders stay in place and charge what they used to.
At the present moment there are about 836 payday loan stores in the state and it looks like new ones appear all the time. The same can be said about car title lenders – they are not really much in favor with the state regulators.
The entire purpose of the CFPB creation in 2010 was to put a better order into these sectors of lending that are in the shadows somehow and provide protection to the individuals and families who have to rely on such small loan industries for this or that reason.
At the present moment other steps at payday loan regulation are discussed not only in Ohio but also in other states, with different level of success. Most regulations proposals include cuts on loan costs as well as alternations of repayment terms. Payday lenders stand their ground, correspondingly.