Payday lending reform is working in Ohio: Michal Marcus

Written by: Guest Columnist, cleveland.com
Published: Jan 28, 2022

BEACHWOOD, Ohio -- For years, the agency I lead -- the Hebrew Free Loan Association (HFLA) of Northeast Ohio, whose mission is to promote the economic self-sufficiency and growth of Northeast Ohioans who are unable to access safe and fair lending resources -- worked with hundreds of consumers stuck in a desperate cycle of trying to pay off outrageously expensive payday loans.

Because Ohio had the highest lending costs in the nation -- with annual percentage rates on these short-term loans approaching 600%, and often we saw interest rates in the 700% and 800% range -- consumers were unable to pay their original loans and kept taking out new ones to pay off older loans. This created a vicious cycle that they could not escape. Our organization provided immediate relief to some borrowers through an interest-free loan program, but we couldn’t help everyone, and many consumers didn’t know where to go for help.

So, HFLA joined with scores of other groups and individuals in a two-year effort to pass statewide payday lending reforms to ensure interest rates on payday loans were restricted and people would have enough time to repay the loans.

We weren’t trying to eliminate payday lending in the state, just trying to make it fairer to consumers.

Now, more than three years after passage of the bipartisan Ohio Fairness in Lending Act, a report from the Ohio Department of Commerce shows that reform is working. The report details that, under the act, the average payday loan in Ohio during calendar year 2020 – the first full year of data available under the law -- was for $403 and cost $112 in fees; before reform, a loan of $400 cost over $600 in fees. And in 2020, $99.7 million in credit was extended to Ohioans through a quarter million loans.

Full article can be accessed at:
https://www.cleveland.com/opinion/2022/01/payday-lending-reform-is-working-in-ohio-michal-marcus.html