Report: Ohio payday lenders still operating

By Marc Kovac

The lenders are still allowed to charge up to 680 percent interest on short-term loans.

COLUMBUS — There are more than 1,000 payday lenders still operating in Ohio and offering short-term loans at inflated rates as allowed under state law, according to a new report by a Cleveland group.

Jeffrey D. Dillman, executive director of the nonprofit Housing Research and Advocacy Center, said some lenders are charging annual percentage rates of as much as 680 percent on small loans, well above the 391 percent allowed under prior state law.

“I think the Legislature will need to take action to address this,” he said, adding, “I’m hopeful that the Legislature will again this year see that the lenders [are using] some technicalities or loopholes.”

Legislation passed by lawmakers and signed by the governor last year was supposed to cap the annual percentage rate charged on short-term loans at 28 percent. The new law also limited the number of loans that could be issued to individual borrowers, prohibited obtaining new loans to pay off old ones and require consumer education courses for repeat borrowers.

But hundreds of lenders have obtained licenses under different sections of state law and continue to operate.

Statewide, 632 lenders have obtained licenses since May under the Ohio Small Loan Act, with another 653 issued under the Mortgage Loan Act, according to the center.

Under the Small Loan Act, lenders can charge an annual percentage rate of 423 percent on a 14-day, $100 loan, according to the study. Under the mortgage act, they can charge 680 percent on that same loan.

Among the study’s findings:

UIn Columbiana County, seven licenses were issued under the Small Loan Act while six were issued under the mortgage act. The county had 20 payday lenders under prior state law.

UIn Mahoning County, 22 licenses were issued under the Small Loan Act, and another 22 were issued under the mortgage act. The county had 50 payday lenders under prior state law.

UIn Trumbull County, 18 licenses were issued under the Small Loan Act while 16 were issued under the mortgage act. The county had 39 payday lenders under prior state law.

Gov. Ted Strickland, Attorney General Richard Cordray and lawmakers already have voiced concern about the issue, and potential legislation has been discussed in a House committee.

Copies of the report are available online at www.thehousingcenter.org.