Ohio Payday Loans

It is no surprise that even national television shows like Bill Moyer's journal and others have featured segments on the State of Ohio's Payday Loan businesses recently. These overnight lending or short-term lending facilities have been charging rather absurd interest rates to anyone willing to subject themselves to what may best be termed "credit for the desperate", but is sold as a short-term "advance against future earnings".

These Ohio payday loan companies had been allowed to charge nearly unlimited interest rates, up until quite recently, where their annualized interest rates would reach nearly 400% (391% I believe). But after quite a drawn out fiasco, the Ohio legislature finally reached agreement earlier this year to pass a law limiting those exorbitant interest rates to a meager 28% (meager is sarcastic here folks!) It only took the discovery and public news of (the usual) rotten political lobbyist connections (to State officials) to embarrass the Ohio government into pushing through a law that was previously going nowhere fast.

Here's what I think about these "payday loans" in general: fact is, if someone that wants to borrow money is such a credit risk that a 28% interest rate won't cover the potential losses and give you a bit of profit in addition, you shouldn't lend money to them anyhow. But, of course, the real objective with these Ohio payday loan companies has not been to make sure they make good loans, smart loans, affordable loans, or reasonably priced loans that can be repaid with relative certainty... the objective instead has always been to get the must vulnerable people hooked into a short-term revolving loan system that is incredibly lucrative and never ends.

This is essentially just another chapter in the Ohio predatory lending pursuits, though of a different nature than the other well known and nationally publicized mess known as subprime lending that really showed itself early here in Ohio when compared to the rest of the Nation. Oh, and in case you didn't know, the Republican legislature in the early 2000's made sure they overturned a Cleveland, Ohio law against such predatory lending practices on the grounds of arguments like: who are we to say we can do a better job managing the loan business than the free market and private sector? Of course, we know where this lobbyist and special-interest driven legislative push at the State level ended up taking Ohio over the coming years! (by the way folks, there are video tapes of the various Republicans in the Ohio House and Senate earlier this decade making these speeches to protect their backers' interests - again, Bill Moyer's show broadcast these videos for all to see and remember recently, since it is unlikely the politicians will be showing you proof of what they said in the past).

Well, you'd think perhaps this time we learned. The warning bell was sounded in Ohio in the subprime mortgage meltdown mess WAY AHEAD of the National alarm. And, the State of Ohio government simply made sure they did their part to not allow something as troublesome as a City law (Cleveland's anti-predatory-lending one) get in the way of "progress" or "free markets" or "capitalism" or what have you. So, this time around, having looked really bad (or, perhaps simply corrupt) in the recent past (oh heck, and again now with the lobbying connections!), Ohio pushed through this new Ohio Payday Loan interest rate limits law.

But, trust me, that Law is nothing short of a well choreographed measure to make it LOOK like they are trying to do what is right. I say this because now, here in Ohio, we are bombarded with the TV Commercials from special interest groups that call themselves things like "Financial Freedom Ohio" or "Ohioans for Financial Freedom" or some other such sickly misleading label for nothing short of what should be called REINSTATE ULTRA-HIGH PAYDAY-LOAN INTEREST RATES AND CALL IT "FREEDOM" GROUPS. Here we go again...

Do not fall for this hype (aka, CRAP) people. Be very concerned whenever you see labels for such political action groups and lobbying groups use nebulous terms like "FREEDOM". The only freedom desired by the Payday Loan Businesses in Ohio is the freedom to charge whatever they want, and the freedom to do so with little to no fear of being reigned in until this turns into yet another massive national issue where the Federal Government has to get involved to "fix" (or bail out) someone or some business (well, a massive number of someones or businesses by then of course).

Please, everyone, remember the last bill of junk we were sold here in Ohio when the "free market economy" was allowed to play out via predatory sub-prime lending. Fact is, if you own a house in Ohio, you are probably paying the price for that in the way of reduced home values. Heck, it spread like a plague throughout the entire nation, so again: wake up and say NO to this push to create yet another wave of mass sub-prime lending that takes advantage of those who can least afford insanely high interest rates. Fact is, when the people that take out 400% loans get into dire straights, all bets are off and anything is a reasonable action for paying back the loan, including stripping the copper pipes out of a house, the aluminum siding off houses, removing catalytic converters from cars, or any other act of desperacy to "stay afloat".

Sure, some people can get themselves out from under these types of loans without resorting to anything illegal or immoral, and without begging, borrowing, or stealing, but the fact is that this business of short-term high-interest loans will provide zero-to-little benefit to anyone over the long-term. The payday loan firms in Ohio and everywhere else do not want customers that can borrow once, pay back a loan, and never return... they want life-long indentured customers that ensure them a steady cash stream forever via the bindings and chains of ultra-high interest rates.

If you really feel strongly about "financial freedom" and allowing loan businesses to charge rates otherwise illegal (you realize your credit-card firm can't charge nearly the rates desired by these payday loan organizations, right?), I have a few simple thoughts I want you to consider.

First, I sure hope YOU never require a loan so desparately that you would take on outlandish interest-rate terms that will cause you to forever be in their grasp.

Second, if you say "I will never need to", great! Now, how about considering the fact that someone else may, whether for reasons acceptable to you or not, find themselves in a position where they see a payday loan as their only option, after you have decided to lend your support to the current Ohio lobbying movement to reinstate and allow essentially unlimited interest rates to be charged of that borrower.

Sure, it is not YOU, so what do you care? Search yourself here, and ask: is it even slightly acceptable to allow someone to pay an interest rate for a small loan, that if continually renewed, levies a nearly 400% annual rate? Borrow $100, and owe $500 if you take a year to pay it back. Better yet, if you know someone in this situation, maybe you should consider the possibility that by risking $100 (and personally lending that person the money), you could perhaps save a person from a situation they can never dig themselvs out of. And, for what? The cost of a couple tankfuls of gasoline?

I can't help thinking how credit in America has changed over the decades - both in the ease of credit, and the attitude towards credit. When I was a child, I remember my parents and grandparents thinking that ANY credit was a last-resort measure, and that any credit to be obtained was only done so under the utmost of need and kept to the absolute minimum required. Additionally, credit was first looked upon as something that with luck, some inter-family borrowing could help with. And, because of the absolute conviction by which all credit repayment was to take precedence over other expense-priorities, everyone involved just knew that people were good for their word and would ultimately pay back any loan given. Wow, have things changed! If only people still treated their finances, loans, and the repayment of loans with such responsiblity, I doubt the concept of a Payday Loan would ever have come to exist in anywhere near its current magnitude. Certainly it would never have become an industry with the power to essentially buy the legal outcome they want.

So, let's not make things any worse than they already are. Fact is, Payday Loans and other cash advance loans are probably here to stay, as is the day of rather lax credit and an overwhelming "need" people have in general to spend beyond their means (exacerbated by inflation and wages not keeping up with inflation of course, but also as part of this modern "must have everything NOW" culture that is mixed in).

So, when someone has to obtain that cash-advance loan for whatever the reason, let's at least consider Ohio's latest law (the one being challenged by the special interest groups) reasonable when they cap such loans' interest rates at 28%. Next, if you have the chance to help someone avoid this payday-loan mess to begin with, do so. And, even if you can not offer someone direct financial assistance, offer them advice and help them understand finances and options for improving their situation... even that can be a help.