Thursday, October 23, 2008

Vote No on Ohio Issue 5

The payday lending bill that was passed by the state legislature is unnecessary and based on the following myths:

People are being victimized: Victim how? Every Payday Lending clearly displays the fee for the cash advance on signs all over the wall. The Customer signs an agreement and they acknowledge that they understand the fee upfront. There is no way a borrower can say they didn’t know the fee.

391% interest rate: Using annualized interest rate for what is the vast majority of time a two-week loan is disingenuous. The reality is the average is that a customer pays $15 per 100 for a two-week advance. Period. No one pays 361% interest. They pay 15 dollars no more no less. Compare this to the unexplained fees of the credit card companies that can turn a $500 debt to thousands in months.

A cycle of debt: These are two-week loans period. Can people find a way around the rules and use multiple payday lenders to extend the debt. Yes. Are they being stupid in doing so? Yes. But they are no victims. The vast majority of payday lending customers are not frequent customers.

36% interest rate is reasonable: These companies give these short-term loans without credit check. Their default rate is high. Such a limit on interest rates would result in losing money on every transaction. Thus would put an entire industry out of business.

There are too many Pay Day Lending Companies: Myth. Quite clearly there is a need for them or they would not survive. Most people that use these agencies have no other choice then writing bad checks. Lets see, $15 fee per $100 or $50 overdraft fee and possible criminal charges. Seems to me the payday loan is a much better choice.

This Payday lending bill in Ohio is another attempt to protect people who first of all are not complaining, and second of all do not need protecting. It eliminates the one choice many citizens have to obtain short term funds in an emergency.

There are plenty of victims from fraudulent and shady financial practices. However those are not in the payroll lending industry, they are with banks, finance companies, credit card companies and mortgage companies. It is time the Ohio General Assembly look at real problems rather then creating victims

Vote No on Issue 5.

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8 Comments:

Blogger Steve said...

How can you support Obama and also support the payday lending industry? The only reason the fee is displayed for customers and in the form of an APR is because it's required by the Truth in Lending Act so that they can make a comparison to other loans. However, the problem is that payday lenders target low-income communities, seniors and the disabled - anyone who they believe will easily be trapped in the cycle of debt. The vast majority of consumers ARE repeat customers - and 90% of the industry's profits come from those customers!

And just FYI - both Obama and McCain voted for a 36% APR cap (The Talent-Nelson amendment) for military personnel because event the PENTAGON felt that the concentration of payday lenders around military based was having a negative impact on troop readiness and morale.

Payday lending puts a strain on our social services sector, puts over 300,000 Ohio families in debt each year and ultimately hurts our families, communities and our economy. We need change, no doubt, and curbing predatory lending in Ohio is another way to accomplish that! Vote Yes on Issue 5!

9:58 AM  
Anonymous Anonymous said...

FREEDOM is at stake with this issue this could be the biggest statewide issue in a long time because there trying to take away a basic freedom.FREEDOM OF FINANCE.VOTE NO ON THE NANNY LAW VOTE NO ON ISSUE 5

11:39 AM  
Blogger Joe R said...

My support for Obama is based on hundreds of issues. The payday lending issue is one issue that I disagree with many progressives on. The fee's charged by payday lending have always been posted. In fact you have to sign an agreement stating those fees. Whether the APR is posted or not is a non issue since these are two week loans the APR means nothing.

Your statement that the majority are repeat customers and most of their profits come from those customers is disputed by other facts I have seen. But then again the definition of repeat could be in question. Using a payday lender a couple times a year could be considered repeat. I surely is not a cycle of debt.

The strain on the social services sector is unsubstantiated and 300,000 families in debt,, yes for what two weeks?

Compare that to the number of families losing their homes due to predetory mortgage lenders or the credit card companies that charge hundreds in fees on top of exhorbatant interest to millions of families.

This law picks on one very small sector of the lending industry completly unfairly and should be repealed.

1:27 PM  
Blogger YesOn said...

Payday loans are a perversion of our free market system – their business model is designed to create a false sense of demand and trap people into loans they will never be able to pay off.

You are correct – these loans are designed to be short-term, but in reality, that’s not how they’re being used. And therein lies the problem. Most people who visit payday loan shops are just trying to make ends meet until they can get their hands on their next paycheck. When that next paycheck arrives, they often find they can’t make their payday loan interest payment – never mind put money towards bringing down the principal. It doesn’t take long for the average working family to get mired in debt. If you don’t believe it, go to www.yesonissue5 and read first-hand accounts by people who have been there.

Capping the interest rate that payday lenders can charge at a more reasonable 28 percent, like Ohio’s new state law does, improves the chances that those who need to, and want to, use them don’t end up trapped in debt. The rate cap turns predatory lending into responsible lending.

The only people payday loans help are the payday lenders, many of whom are based out-of-state. That means that a good portion of the millions of dollars Ohioans sink into payday loan interest payments and fees every year is flowing out-of-state and not being reinvested here at home.

If we don’t vote YES on Issue 5, the payday lending industry in Ohio will be allowed to go on handing out reckless 391% interest loans to people who can’t afford them. That’s not what we need in these troubled times to get our communities and our economy back on track.

3:06 PM  
Anonymous Anonymous said...

The talent nelson pact has been a terrible thing for the military simply because they took away the product but the need remained.The military personal that needed cash advances have turned to unregulated offshore internet payday loans that roll over.Loan sharking in Georgia has also reared it's ugly head in recent months several rings of loan sharks have been reported and arrested.You can take away the product but the need remains.VOTE NO ON 5

4:32 PM  
Anonymous Anonymous said...

I support Obama and im voting no on 5 like most we just dont buy the APR on a two week loan.STEVE you can cry and fuss but an APR on a two week loan that dog dont hunt.VOTE NO ON ISSUE 5

4:35 PM  
Anonymous Anonymous said...

Well, I'm voting for Obama and I'm voting yes on issue 5 because I have a conscience and I don't believe that payday lenders should be preying on the poor, elderly and disabled. Predatory mortgage lenders have wreaked havoc on our state and it's time to see the light! We don't need predatory lenders - we need leaders to come together to think of something better than 391% APR!

Vote yes on issue 5!

3:22 PM  
Anonymous Anonymous said...

This is a great article as they all are. I from been wondering less this an eye to some time now. Its gigantic to receive this info. You are fete and balanced.

11:56 AM  

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