I am concerned about the economic impact that payday loans have on local communities. For that reason, I am announcing my support for Issue 5 and urge a "yes" vote on the question that will appear on the November statewide ballot.
A "yes" vote would preserve Ohio’s nationally acclaimed payday lending reform law which was passed by the Ohio General Assembly earlier this year and signed by Governor Strickland. The law capped the annual interest on payday loans at 28 percent, down from the 391 percent APR typically charged under the old law.
Reckless spending, whether on Wall Street or Main Street, hurts more than those who borrow money. It leads to added stress on local governments and other providers of social services in our county. Counties are already struggling to balance their budgets.
Payday lenders brought on the new state regulation by failing to police themselves. Ohio’s new law will still allow lending options, but those options will be affordable. The 28 percent interest rate cap is reasonable. That’s the same rate charged on credit cards issued by most major banks. This issue was thoroughly reviewed by the County Commissioners Association of Ohio, who felt a "yes" vote to retain the law would help both large and small counties.
According to "Trapped by Design: Payday Lending by the Numbers," Ohio payday customers pay more than $318 million annually in loan fees, giving customers less money to spend on basic necessities and increasing their use of food pantries and other social services, many of which are supported by county government.
The study also found:
• The average loan amount is $328 with an average APR of 391 percent;
• The average payday borrower takes out 12.6 loans per year;
• More than 300,000 Ohio payday borrowers are trapped in a cycle of debt.
The study was conducted by the Ohio Coalition for Responsible Lending.
In addition to being supported by the County Commissioners Association of Ohio, other supporters include AARP, Ohio Farm Bureau, Ohio Association of Second Harvest Food Banks, Habitat for Humanity, Ohio Manufacturers’ Association, Ohio Roundtable, Ohio Association of Community Action Agencies, Catholic Conference of Ohio, East and West Ohio Conference of the United Methodist Church, Ohio Council of Churches and others.
David Dhume
Madison County Commissioner
