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The arguments are compelling. A much needed service not available at other financial institutions because of the cost and risk, or predatory lending that takes advantage of the financial illiteracy of the working poor. The payday loan business is booming in Ohio and nowhere more so than Franklin County, number one in Ohio with 183 quick loan office locations as reported by Policy Matters, a Cleveland based progressive think tank.
Payday lenders charge as much as $15 per $100 loaned, which equates to a 390% annual percentage rate. Borrowers can be caught up in a cycle of borrowing, payback, and then needing fast cash again, becoming increasingly dependent on the easy availability short term cash loans. Worse, borrowers can visit other lenders in order to pay off earlier loans, compounding their problems and their fees.
Lenders say that interest is accrued over a few weeks not a year and that their fees are equitable with accrued fees on bounced checks or credit card interest plus late fees. Further, they offer a valuable service to borrowers who have no other short term credit alternative, no credit history or may be a high credit risk.
Financial education might help some borrowers. A handful of alternative lending programs sponsored by non-profits, credit unions and banks have been started in California to address the issue there. And, The Ohio General Assembly takes up the debate this fall with potential legislation aimed at capping short term loan interest rates.
A classic debate of good business versus public good featuring Darryl K. Dever, chief lobbyist for the payday lending industry and Bill Faith, Executive Director, Coalition on Homeless and Housing in Central Ohio. Bill Cohen, Correspondent for Ohio Public Radio/TV Statehouse News Bureau will serve as moderator.
Payday lenders charge as much as $15 per $100 loaned, which equates to a 390% annual percentage rate. Borrowers can be caught up in a cycle of borrowing, payback, and then needing fast cash again, becoming increasingly dependent on the easy availability short term cash loans. Worse, borrowers can visit other lenders in order to pay off earlier loans, compounding their problems and their fees.
Lenders say that interest is accrued over a few weeks not a year and that their fees are equitable with accrued fees on bounced checks or credit card interest plus late fees. Further, they offer a valuable service to borrowers who have no other short term credit alternative, no credit history or may be a high credit risk.
Financial education might help some borrowers. A handful of alternative lending programs sponsored by non-profits, credit unions and banks have been started in California to address the issue there. And, The Ohio General Assembly takes up the debate this fall with potential legislation aimed at capping short term loan interest rates.
A classic debate of good business versus public good featuring Darryl K. Dever, chief lobbyist for the payday lending industry and Bill Faith, Executive Director, Coalition on Homeless and Housing in Central Ohio. Bill Cohen, Correspondent for Ohio Public Radio/TV Statehouse News Bureau will serve as moderator.
September 21, 2007