How Ohio Solved Payday Loan Reform

When I was in the military, I ran into some
trouble. I think the ball joints went out of my four-by-four
truck. At the time, I really didn’t have a whole
lot of credit. And some friends of mine had told me about
this place. I went in. They gave me what I needed. But then over time, they started continually
taking more fees, more fees I had to go in and borrow more loans to take
care of the fees that were building up. The financial situation that I was in, I was
barely, barely making it. And people calling me and continually after
me. And so it was a very scary feeling, and I
was very, very depressed I thought I was getting help. I had no idea of all the fine print. I ended up paying around $3,000 or so for
an original loan of between $700 and $800. In the state of Ohio, we have an issue with
payday lending. It’s supposed to be a short-term loan that
is for someone who needs to get to their next paycheck. Because they’ve had some sort of short term
financial setback or emergency and they don’t have access to a traditional form of credit. So, you go to these payday lending shops and
you provide them with your bank account information, proof of income. And then that organization would provide you
with an advance. And then two weeks later you’re responsible
for paying back whatever you borrowed with interest and fees. They’re designed in a way that keep people
in debt for a long period of time. They were designed to make them very difficult
to pay off. And they call it the cycle of debt, because
you got into it, and you couldn’t get out of it. Springfield is a city where people are struggling and are having a hard time making ends meet. We have four McDonald’s in town, and at one point, there were 18 payday loan stores. I was expecting to find rates of like 30%,
40%, But then I saw, man, their rates were like 500%, 600%. And I couldn’t believe it. I saw they were taking advantage of veterans,
senior citizens, people with disabilities. The payday loan industry, instead of providing help, was making their situations much, much worse. Carl Ruby came to me in 2016. And we got together and said, we have an issue. What can we do about it? People in the state of Ohio need this type
of credit–people with low credit scores that can’t go into a bank like I can. But I said, I could do something about regulating
the lenders so that we could protect consumers in the state of Ohio. I was sent here to represent the citizens
of Ohio, the people of my district who are overwhelmingly supportive of common sense
guidelines that protect consumers in Ohio who are working to make ends meet. This became a very bipartisan effort because
we had to have people on both sides of the aisle come together and agree that we needed
to do something. Let me make this clear. HB 123 Does not set out to eliminate payday
lending in the state of Ohio. We’d rather make this practice much fairer
for the many, many people in the state of Ohio that use it. One of the great things that happened was
as we had hearings, we had people from communities all over the state of Ohio come in to support
what we were doing. The Ohioans for Payday Lending Reform Coalition
was a very diverse group of individuals, racially diverse, religiously diverse. So, we had rural, urban core type of partnerships
that were formed all throughout the state. Over the last two years I have spent hundreds
of hours and I’ve made countless trips to Columbus and other cities at my own expense
to advocate for payday loan reform. The fact that the rates were so exorbitant,
and a non-negotiable for us was it had to include a rate cap. And what I like about House Bill 123 is it
caps the interest rate, but it also sets a limit on monthly payments, in that monthly
payments can only be 6% of a person’s monthly income. The pushback we got from the lobbyists was
that they would close up and go out of business, the payday lenders. And we knew that simply wasn’t true. In my career I’ve seen firsthand the damage
brought by predatory payday loans. I believe House Bill 123 is good public policy because
it accomplishes its goals without adding excessive burdens to responsible lenders, thus encouraging
participation in the short-term loan market. One of the simple solutions that the payday
lenders try to offer is, we’ll just give everybody financial literacy and we’ll keep making these
loans at the same rate and that’s going to solve the problem. It would be just like if I’m in a pool
and I’m drowning. At that moment, I don’t need someone to try
and teach me how to swim, I need a life raft and you could teach me how to swim later. What Pew brought to the table was, was the
fact that they brought us data from all across the country, from all across the state of
Ohio. By passing this bill, we have a chance of
keeping $75 million in the state of Ohio every year. The payday loan industry had more lobbyists
than we have senators. And we had this handful of people, most of
us are inexperienced, up against that. It felt like a David and Goliath scenario. People wanted to be a part of getting this
done and took great pride in being able to go and–and stand in the state house and
take a stand on this issue. It was a very long process but eventually,
we did get to the point where we have votes in the House and in the Senate. Each of those days were very contentious. There was one point when we had some individuals
that started to doubt whether or not this was actually going to take place. And even the day that the vote took place
we’re still expecting at the last minute, you know, something’s going to go wrong. And then to see the votes pop up on the board. Tremendously rewarding. I feel like the government actually stepped
up to the plate. This bill coming into law will give others
the opportunity to get the help that they absolutely need, without incurring the high
interest rates, all the fees. They can actually have a time, a good, reasonable
amount of time to pay their loans back. The balance Ohio was able to strike between
the need to keep lenders in the state and the need for affordable products. I think we’ll be looked at by the rest of
the country as a really pragmatic way to go about this. I think people in the state of Ohio and across
the country are looking for people who work together to do the right thing and come together
and say, hey, this is something we need to fix. But once you start down that path, once you start
having hearings, once you start telling people, they begin to understand the problem that
payday lending is.

One comment on “How Ohio Solved Payday Loan Reform”

  1. Artem Buhryak says:

    Indeed it is not easy to get good loan nowadays. One has to take time and not hurry. I know one reliable agency, 've been using them several times, they're really good:

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