Hmmm...wonder what he thinks of Mr. Rabenold and his candidacy, and what Mr. Rabenold thinks of these measures?
Would You Pay a 391% Interest Rate?
During the last several years our economy has been growing at a solid pace with unemployment rates near all time lows. Furthermore, the stock market has enjoyed four
years of bull market returns during a period of growth and economic stability.
However,in recent months, the mortgage and lending industry has experienced a lot of turmoil as homeowners have faced foreclosures in the wake of skyrocketing mortgage payments.
Much of the problem in the industry revolves around homeowners who receive loans that they are unable to repay, eventually causing default on the loan. Often lenders issue loans that start out with reasonable and affordable rates, but in time, the rates increase and become overwhelming.
In an effort to address these issues, my colleagues and I in the legislature passed new rules and regulations in the last General Assembly to address what many consider predatory lending. These steps should protect homeowners in the future from lenders seeking to persuade them into bad loans.
In addition to problems in the mortgage and housing industry, payday lending is becoming a growing problem in Ohio. Payday loans are short-term, high- interest loans that are made against a future paycheck. These quick, easy to obtain sums of money are often used to pay off bills, buy groceries or simply get by until the next pay check.
Members of the House started discussing this issue in more detail following the release of a report by Policy Matters Ohio. According to this report the number of families with short-term payday loans is more than 400,000. Additionally, in 1996 there were approximately 107 of these stores in Ohio and a decade later there are approximately 1,586. In fact, Ohio now has more payday lending locations than we have McDonalds, Burger King and Wendy’s restaurants combined.
These businesses can sometimes charge as much as 391 percent interest on their loans and can make it difficult for families to get out from under this debt. The fees for using a payday lending shop are usually $15 per every $100 borrowed for a two-week period.
The short period given for repayment added with interest rates and fees often make it difficult to pay off the loan on time. As a result, many individuals are unable to repay the first loan and take out another loan to repay the first, creating a hard to escape cycle.
In order to address this issue, Representative Bill Batchelder (R- Medina) is working with other House members to regulate pay lending in Ohio. Many of my colleagues believe the legislation should contain provisions that would cap the interest on payday loans to 36 percent. Additionally, the legislation would limit the frequency of the loans, putting a stop to the endless cycle of taking out more loans to pay off past loans. And finally, payday lending over the Internet would be banned.
Many of my colleagues and I believe that Ohioans deserve certain rights and protections when taking out loans. It is important that consumers are offered reasonable rates that will not force them into unfortunate situations that ultimately hurt their financial standing. In the coming months, I look forward to working on this issue in an effort to improve the environment of payday lending in Ohio.
Don’t forget that this is Brown County Fair Week! Please come out to support the fair in Georgetown. You and your family will have a great time!
As always, please contact me at the office if there is a state-related matter you feel strongly about. I can be reached by calling (614) 644-6034 or write me, State Representative Danny Bubp, at 77 S. High St., District 88, Columbus, OH 43215. I can also be contacted by e- mail at District88@ohr.state.oh.us.
