Payday loans seem like quick fixes to the money woes plaguing many Ohioans these days. But State Rep. Matt Lundy of Elyria says payday loans still take advantage of customers, despite voters' approval last year of a cap on loan interest to help people avoid getting trapped in a cycle where they're using one loan to pay off another:
Lundy: The only way that we're going to turn around this economy is to stabilize the consumer and be able to do that we want to be sure that when Ohio consumers are walking in to receive a loan that they're treated fairly.
Lundy is the chief sponsor of Ohio House Bill 209, meant to close loopholes in the lending law that allow lenders to charge high fees in lieu of high rates. But where Lundy sees fairness, Checksmart CEO Ted Saunders sees ruin for his industry, as he told ideastream's Rick Jackson.
Jackson: What happens to you and your company if 209 passes?
Saunders: We leave the state
Jackson: That cut and dried? We leave the state?
Saunders: We'll pull out all of our stores, and I'll have to let go all those people, and I'll find something different to do with my life.
Checksmart operates over 90 stores in Ohio. Representative Lundy says the legislation is not meant to destroy the industry, but to make lenders comply with the mandate previously set by Ohio voters.
Lundy: We're just simply trying to enforce issue 5, the 28% cap, and I would suggest that the industry change its business model to make things work because that's where Ohioans want to be.
Payday loans may be expensive compared to bank loans, but enough people want them that the industry runs over a thousand stores in Ohio.