Sunday 24th of January 2021

Ohio to Change the Face of Payday Loans?

Over the past decade, much has been made over the practice of payday loan lending. For some people, payday loans are a savior in times of need, for others, they’re the first step toward an uncontrollable debt. While it’s true that cash advances have high interest rates, they also provide the money people need when there’s no other way of attaining it. With valid arguments on each side of the debate, law makers will soon be asking the public to make a decision that could have a dramatic effect on the industry.

Could Ohio Change the Face of Short-term Loans?

The payday loan debate is about to come to a head in Ohio, where the General Assembly has already passed a law that slashes the annual interest rates on current advances, from 391% to 28%. However, the law has yet to take effect and never will if the industry has anything to say about it. Such a drop in interest rates would take away nearly all of the profitability in lending and all but crush the industry. Lenders are already doing what they can to fight it by spending nearly a million dollars in campaigns and public advertisements. As long as the short-term lending industry gets enough valid signatures from Ohio voters before August 31st, the law won’t take affect unless the referendum is approved in November. The payday loan lenders fully expect to have those signatures, but the real concern seems to be in how the referendum is eventually worded for voters.

It’s All in the Wording

When voters take to the polls later this year, both sides of the short-term loan debate will be hoping they choose “no”. That’s because both sides want the referendum to be worded in a specific way, one where “no” coincides with their interests. Generally speaking, when it comes down to statewide ballot issues, voters typically say ‘no” to issues they aren’t knowledgeable about or don’t understand. With some confusing wording and fancy legal jargon, both sides hope they can convince voters to select “no” on the ballot. The Ohio Ballot Board wants to avoid such an issue entirely by making clarity a top priority in how issues are worded. In the past 150 years, voters in Ohio have only had to make decisions on 11 referendums, the last coming in 1997. The issue back in 1997 was concerning working compensation laws and was of course won by the “no” side.

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