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Payday loan advocates launch ballot drive
Group seeks to overturn 28 percent limit on loan interest rates
Friday, June 06, 2008
COLUMBUS — Ohio voters may get the last word on payday lending.
Opponents of legislation setting a 28 percent annual rate cap on short-term loans announced they have launched a campaign to put a referendum on the issue on the Nov. 4 ballot.
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Gov. Ted Strickland signed the new law with the 28 percent rate cap on Monday, June 2. It's scheduled to go into effect in 90 days. However, if the Community Financial Services Association of America, the group backing the referendum, meets the requirements to get the issue on the ballot within 90 days, the legislation would have to be approved by voters on Nov. 4 to take effect.
Payday lenders have said they couldn't make enough money under the new law and would go out of business, jeopardizing 6,000 jobs.
The law would wipe out the current system in which the fees for payday loans usually are $15 for every $100 borrowed for two weeks, which calculates to a 391 percent annual percentage rate.
Tom Allio, chairman of the Ohio Coalition for Responsible Lending, called these payday loans a "toxic product" and said he was confident voters would back the new law if it came to that.
