Long-Awaited Payday Lending Crackdown Goes Into Effect
The comprehensive bill that completely changed the landscape for payday lenders in Ohio will officially go into effect this weekend, nine months after it passed, giving the industry time to adjust. Supporters say the reformed short term lending industry will be a national model. Advocates who wanted to change the payday lending laws in Ohio said too many people were getting caught in a debt spiral, with high interest rates making it impossible to get out.
The bill would cap interest rates at 28%, close loopholes, and keep monthly fees below $30. It also creates payment guardrails for the first three months of the debt.
Alex Horowitz is with Pew Charitable Trusts, which was vocal on this issue. He says this creates a new trajectory for Ohioans who need to borrow.
“Every payment reduces their balance and gives them a pathway out of debt," Horowitz says.
The lending industry warned that the law would run most short term lenders out of Ohio, but Horowitz says it’s actually attracting new lenders to the state.