According to a new poll by Center for Consumer Freedom, only 10% of Ohioans say they would make loans at the 36% or 28% rate cap proposed by Ohio legislators.      From the news release:

When asked how much they would charge a complete stranger who wanted to borrow $100 for two weeks, just nine percent of respondents said $1.50 or less. Over 80% of respondents would still be unwilling to make the loan at $15 or less, the common rate for a payday loan of that size in Ohio.

Anyone wanting to learn more about the survey should contact Tim Miller,  Center for Consumer Freedom, at 202-463-7112 or .

This Columbus Dispatch story provides further details.  Key passage:

Stunning both the payday-lending industry and consumer advocates, House Financial Institutions Chairman Rep. Christopher R. Widener, R-Springfield, made major changes yesterday to a plan he introduced last week that did not lower the current 391 percent rate.

Widener introduced House Bill 545, which would cap payday lending rates at 28 percent, limit borrowers to four loans per year, cut the maximum loan size from $800 to $500 and require that borrowers get at least 31 days to pay off a loan.

This Cleveland Plain Dealer story has the latest, but payday lending lobbyist Darryl Dever sums it up nicely:

“If 36 percent puts you out of business, what do you think 28 percent is going to do?” asked Dever.

It’s amazing that given the rough time Ohio is having economically legislators would consider a bill that costs the state 6,000 jobs, millions in tax revenue, and uncountable losses to vendors, contractors and others that do business with the 1,600 payday loan stores in Ohio. 

From today’s Columbus Dispatch:

“If Grendell’s bill or House Bill 333 were to pass, the payday-lending industry says its more than 1,600 stores would be put out of business quickly. Under a 36-percent rate, they would be allowed to charge less than $1.50 per $100 borrowed on a two-week loan. The current rate is about $15.”

Thanks to Dave for sending the following to Payday Pundit…

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New Hampshire is on the verge of banning payday loans. I own a payday loan office in Manchester, NH. The following is a letter one of my employees wrote to address this injustice.

Guest Shot: Appalled at Legislatures effort on payday lending

February 22, 2008 6:00 AM

I am a payday loan officer in Manchester. I have been very active with the current bill (HB 267) that has gone through both the House and the Senate.

This bill will eliminate payday loans in the state of New Hampshire by imposing a 36 percent APR cap. Thirty-six percent would mean for every $100 loan, we would make $1.36, this is not enough to pay normal maintenance for a company. I am appalled at the behavior of both the senators and House members in regard to these bills. It is my belief that instead of working in the interest of their constituents, they are working in the interest of the banks.

…In the past four years, the welfare department of New Hampshire has seen a drop in the number of people requesting assistance. Oddly enough these numbers coincide with when payday loans first started to emerge in the state. Instead of New Hampshire residents asking for government assistance, they are trying to make ends meet on their own.

…At the New Hampshire Senate hearing which was held on Feb. 14, Sen. Bargdon of Milford, admitted to having a limited knowledge of how payday loans work. Instead of voting with a lack of knowledge about the subject, he actually visited a payday loan office. He spoke to customers and loan officers. After getting an idea of what it is we do, he voted against HB 267 to eliminate payday loans, deeming payday loans to be a valuable service. Perhaps the vote would have gone differently had more senators took the initiative to visit or even call a payday loan office.

…HB 267 has left a number of people without an option and currently it appears that the only ones benefiting from its passage are the banks. The banks who will be making $30-$40 per overdraft fee. As stated earlier, these fees equated more than $30 million in one state, and that was within one year. It now seems as though the senators have lost the interest of the people and replaced it with an interest for the banking institutions. My concern is no longer for myself and the 200 other employees out of a job in the state of New Hampshire. My concern is where are our customers supposed to go?

Well said Ms. Simms.

More than 600 payday lending employees and supporters rallied on the steps of the Colorado Captiol on Tuesday to voice their opposition to a bill that would cap the interest rate of payday loans at 45 percent interest. Under a 45% APR cap, the fee per $100 would be $1.73.  Payday lenders would be forced to close and 1,800 people would be out of a job. 

 

 

 

 

 

 

 

Read more and watch the video coverage at: http://www.thedenverchannel.com/news/15568724/detail.html
 

 

 

 

 

 

Nice to see a consumer blogger playing it straight.  This Seattle Post Intelligencer blogger picks up Check into Cash’s announcement with no commentary.   It’s also picked up by BizJournals.   Maybe politicians will get the message that a 36% rate cap IS A BAN. 

Check into Cash, a CFSA member company and one of the nation’s largest payday advance companies, has announced that they have closed their remaining 13 stores in Oregon. Their action comes one year after the Oregon legislature passed a law imposing a 36% APR cap on payday loans.

 

Allan Jones, Check into Cash CEO, explained that many stores closed when the legislature passed the 36% APR cap. No longer able to offer payday loans, they tried to meet customer needs by offering check cashing services and a new loan product.  “These new products were not popular with consumers, nor profitable for the company,” said Jones.

 

Also from the release:

 

“With the closing of our remaining stores, Oregon citizens will no longer have access to short-term credit and will be forced into costly products such as overdraft protection and bounced check fees.”

“We tried to work within the constraints of the law, but lost money each and every month we tried to operate there under the new rules. We have proven that it cannot be done.”

 “We are saddened that we have been forced to close our stores, putting our employees out of work and leaving our customers without a service they appreciated.”

“As we warned the legislators in Oregon, payday lending cannot be offered under a 36% rate cap. An annual percentage rate of 36% applied to a two-week loan amounts to less than a dime a day on a $100 two-week loan. That cut us from $15 to $1.38 for the two-week transaction. The legislators seem fixed on the APR of 391% as being bad, when in reality, it amounted to $15.”

 

Mr. Jones said it best when he stated, “The legislators will now have to answer to the tens of thousands of consumers whose credit choices are now limited because this type of micro-lending has been abolished, forcing consumers to more expensive options where no APR disclosure is required, such as overdrafts.”

A proposed annual rate cap on payday loans in Colorado would force 90 payday lenders to close and eliminate 1,800 jobs, according to a Fox News Colorado report.

The proposed 45% APR rate cap would mean that the maximum fee per $100 would be $1.73. The product cannot be offered for $1.73. If passed, payday lenders would no longer be able to offer payday loans and will be forced to close their doors. Customers would be left without a short-term credit option and 1,800 employees would lose their jobs.

Montrose, Colorado’s Daily Press published a story online today about payday lending store owners lobbying their state legislators to oppose a 45% interest rate cap.  Dan Gray of Colorado West Quick Cash in Montrose summed it up pretty well: 

“The interest rate is not workable for us to remain in business.”

We hope Colorado’s legislators will listen to their consituents, and not activists, and keep payday lending in Colorado.