Payday loans still in demand
When Ohio lawmakers capped interest rates on payday advance loans, they knew that payday lenders wouldn’t be able to stay in business if they operated under that stipulation.
The new law capped interest rates on payday loans at 28 percent. But trying to drive payday lenders out of business didn’t eliminate the need for small, short-term loans.
Payday lenders find alternatives
Ohio lawmakers accused payday lenders of being “predatory” and tried to get rid of the practice in the state. But consumers didn’t buy it. Borrowers still needed the service.
Because payday advance loans lenders were still getting customers, they saw that their services were still needed. Instead of closing up shop and leaving their customers with nowhere to go, they figured out a way to maintain their businesses. Because they couldn’t charge higher interest rates, they increased fees so they could stay open.
Instead of recognizing that people in Ohio want and need this service, activists are again accusing lenders of using a “loophole” in the law. Some lawmakers are starting to consider how they can regulate payday advance loans even further.
The irony is, they will be hurting the people thye say they want to protect. The interest rate cap was placed “to protect consumers,” lawmakers say. But if payday loans are driven out of the state, consumers will have fewer financial choices.
Friends in need
Consumers choose to use payday loans because they need them. Borrowers know the terms of the loans beforehand, and they choose to exercise their options. Ohio lawmakers won’t be doing consumers any favors if they regulate payday advance loans out of the state. ... click here to read the rest of the article titled "Borrowers in Ohio Need Payday Advance Loans"