Task force tackles pay-day loans


Paycheck to paycheck, many Ohioans find themselves caught in an unforgiving payday lending routine—no money, high interest rates, and no way out.

The Madison County Continuum of Care Committee is working to erase this cycle of debt for struggling residents through “Promoting Stable Homes and Stable Families.”

The program’s overall goal is for all families in Madison County to be self-sufficient and stable by 2017. A chunk of the plan includes working with the Ohio Coalition for Responsible Lending to restrict payday lending practices. The plan also includes reaching out to debt-ridden people to give them the knowledge to change their situations.  

“We want all the people in our community to become self sufficient—to both better understand and better take care of our money,” said Jim Cesa, executive director of Community Action and co-chair of the Continuum of Care.

“The thrust behind these programs is to assist these people and develop programs that will uplift them,” said David Dhume, a Madison County Commissioner and Continuum of Care co-chair. “It’s so critical that…we create an economic development area where we can sustain livable wages” to keep people from turning to payday lenders.

Dhume said many people get “stuck in the debt trap” when they go to payday lenders and rent-to-own stores that charge high interest rates.

“Some payday lenders charge (customers) up to 391 percent to borrow their own money,” Cesa said.

To pay off an initial payday loan, a borrower ends up paying high fees every two weeks; their upcoming paychecks are used as collateral. This lending practice has lured in more than 300,000 Ohio families.

Despite the high fees and consequences, payday lending is a growing industry in Ohio, with 1,562 locations.

Cesa said the “Stable Families” program is fighting the trend by informing those in debt about their options through a financial literacy video.

“The video will present the hazards of predatory lending…as well as the advantages of establishing a good relationship with financial institutions in regards to checking and saving accounts and the importance of financial planning,” Cesa said.

He said it is important for people to know the importance of good credit.

“Most of the individuals who qualify for our programs, if they go to a bank, they will not get a loan or it will be at a higher interest rate,” Dhume said. “This is how the system works, and we need to understand that.”

Madison County is part of the western boundary of Appalachian Ohio, in which the poverty rate is higher than the statewide and national averages.

“We’re trying to get to people who haven’t created wealth for themselves to know that it is possible to be self-sufficient,” Dhume said.

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