In Ohio, we have an issue on the ballot to regulate lending by smaller "Payday" outlets. These street corner establishments specialize in very short term small loans of a few hundred dollars or less. A typical $100 loan for two weeks carries a $15 fee. This calculates to an annual rate of about 390%. The ballot provision would limit the APR considerably and bring it in line with credit card rates. As well, it would limit the number of loans a person could take out in a 1 year period. There are many good, IMO, arguments on both sides of the issue.
Those against the proposal say it will give no choice to poorer persons who need emergency loans. They say the fee for the small loans may actually be preferable to credit card late fees they might incur by not borrowing the money. As well, they claim it will put many of these loan institutions out of business costing the state thousands of jobs. As well, they say that borrowing is a private matter and that the proposal, in order to limit the number of loans a person could take out, would mean collecting personal data on these people.
The proponents of the proposal say there's a need to break the debt cycle and that many people find themselves in a never ending need to continue to borrow money...that taking out a $100 dollar loan to make the minimum payment on a credit card in order to avoid a late fee is not a solution. They also say that jobs would not be lost as these "Payday" lenders are already applying for licenses to operate under the restrictions...that they have no intention of closing.
I have mixed feelings about this one. My first thinking is that folks need to swim in the water they voluntarily jump into. I suspect most folks in this situation did just this but that a few were pushed. I will probably vote "Yes" to restrict such businesses and hope more good than harm will come of it.
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