Consumer Car Buying Advice Blog

The dust has finally settled and its time to report on the outcome of an Ohio ballot initiative designed to overturn portions of a new payday lending law.

Payday Loans

In two previous articles, those of us here at Auto Credit Express have discussed payday loans and the payday loan industry. These are loans made by national companies out of small storefront shops that specialize in making small loans (between $100 and $500) for short periods of time. Normally, this might seem innocuous enough, but these loans are made at a cost of $15 per $100 loaned (for 2 weeks). If you do the math, this works out to an annual percentage rate of 391%.

The Ohio Law

In July, Governor Ted Strickland signed into law a bill that limited the annual percentage rate for these types of loans to 28%. This bill passed the Ohio Legislature with a great deal of non-partisan support. The governor was satisfied, the legislature was satisfied and most Ohioans, it appeared, were satisfied. But as you might expect, the payday loan industry was far from content.

Ballot Issue 5

To challenge the new law, scheduled to go into effect within 90 days, payday lenders formed a coalition called Ohioans for Financial Freedom. OFF spent in excess of $16 million to gather signatures, place the issue on the ballot and campaign for a “no” vote in November – outspending those in favor of the law by more than 60-to-1, according to the Columbus Dispatch.

Kim Norris, spokesperson for OFF stated, “Ohio is moving toward, ‘We know better than you, hardworking Ohioan. We know how many loans you should take out and when you should take them out,’ referring to the four loan per year limit of the bill and the state database that would be set up to monitor loan activity.

But Sandy Theis, spokesperson for Yes on Issue 5, had another take on the industry: “It’s all about the rates. It’s not about financial freedom. It’s not about financial choice. It’s all about greed. If people know what they’re voting on, we crush them. If they don’t, then we’re in trouble.”

The Results

On November 5th, Ohio voters upheld the new Ohio law by a margin of almost 2-to-1. Here at Auto Credit Express, we would like to congratulate our neighbors to the south.

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