Last fall, payday lenders fought unsuccessfully to repeal a new state law that would cap interest rates on loans to 28 percent. But as the election battle heated up, lenders began applying for licenses to operate in Ohio under different laws: ones for businesses making small loans, second mortgages and even for pawnshops. Jeffery Dill man led a study for the Housing Research and Advocacy Center. He found that under these other laws, payday lenders can charge more than the 391% APR that was in place before the interest rate cap.
Jeff Dillman: Some of these rates that are being charged now for a $100 loan are 680 percent instead of 391percent. So instead of going down they've actually rates going up in some instances.
Dillman says other states have revisited payday lending laws when stores found ways to keep high rates. He wants Ohio to do the same. The lending industry, though, argues their rates are not high. Payday lenders say they offer two-week loans, so calculating the interest rate annually is deceiving. In a recent earnings call, the CEO of payday lender Cash America said new loan products in Ohio could perform well this year, though it's still too soon to tell.