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Payday loan restrictions may make 3 licenses to be revoked

The Ohio Department of Commerce launched the campaign against payday lenders that insist on their borrowers to pay check-cashing fees. The Department is reworking the bill that would limit interest rates on payday loans, which is about bringing more legislative support.

The Department of Commerce determined three companies that violate the law and are to be revoked their lending licenses, they are: Quik Cash in Cleveland, Check into Cash in Toledo and 1st Choice Financial in Washington Court House.Payday loan restrictions may make 3 licenses to be revoked

The thing is that most cash till payday companies in Ohio issue checks instead of cash. The checks are to be cashed in the stores and in this respect customers are to pay fees. However, according to the Department of Commerce three abovementioned companies required the fees as part of loans. It violates the freedom of customers as they are not provided an option to cash checks wherever they want.

The lenders can oppose the action in hearings to occur over the next three months.

House Bill 209 is expected to limit the maximum annual interest rate on loans availed for less than 90 days and amounting to less than $1,000. The maximum annual interest is to be 28%. The Bill is supported by a number of people saying the Bill brings about the results state leaders and Ohio voters desired to achieve in 2008 through legislature and statewide referendum.

Approximately half of all instant payday loan lending stores in Ohio have closed. Those who remained changed their licenses to be in conformity with legislation.

Now that lenders cannot charge $15 per $100 (for a 14 days loan), which is 391 percent interest rate, they use other methods: charging credit-verification, origination and check-cashing fees. Thus they get approximately the same sums they used to get.

As the opponents insist such loans are likely to catch many borrowers in a very difficult situation. High rates and small tenure period are too disadvantageous to people that they are likely to default their payments. However, same day payday loans lenders say that limiting loans any further would entail negative consequences that will first of all deprive people who are in financial difficulties of the only way out.

Both parties have opponents that have left the bill in committee for 8 months. Some Democrats are somewhat concerned with decrease of credit options, which is to affect customers. Some Republicans don't want more government regulation in the area. Regardless of the party there are positive consequences and negative ones.

Posted on Tue, 2010-02-23 08:28
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