Payday loans law protects consumers from greedy lenders
A little more than three years after the vote on the bipartisan personal loan reform, the Ohio Equity in Lending Act Ohio consumers have widespread access to safer and more affordable small-dollar loans, according to a recent Ohio Department of Commerce Report.
the historical legislation has put millions of dollars back in the pockets of consumers each year while preserving access to credit, just as Ohio lawmakers and reform advocates—including me—envisioned.
In 2020, the first full year of reporting after the new law, lenders extended $99.7 million in credit through quarter-million loans.
Before reform, Ohio had the worst payday loans in the country, with 600% interest rates as standard practice. Now the state owns some of the strongest consumer protections and lowest prices in the country. Ohio’s law is being touted as a national model, and bipartisan lawmakers in Virginia and Hawaii have already followed Ohio’s lead.
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According to the Ohio Commerce Report, the average loan issued under Ohio’s short-term loan law is $403. Before the reform, it cost over $600 in fees to borrow $400. After the reform, the average loan costs $112.
The law’s success has been hailed by lawmakers, coalition leaders, and members of the business community across the state. He effectively ended the payday loan debt trap.
Despite a lot of kicking and shouting the payday loan industrywho said the sky would crumble if these reforms were passed, policymakers in Ohio did the right thing and put in place rules that work for both borrowers and businesses.
The facts show that we have successfully struck a balance between securing credit and accommodating law-abiding lenders. Workers and families can keep hundreds of hard-earned dollars in their pockets, instead of having that money diverted from the economy of their local community.
I want to thank Ohio Rep. Kyle Koehler, R-Springfield, and retired Rep. Mike Ashford, who championed reform, and everyone else in the coalition.
This reform effort would not have happened without all of their hard work and determination in the face of a very well off payday lending industry determined to avoid any semblance of common sense regulation and oversight.
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Ohioans can be proud of this bipartisan law which is working as intended and has become a model for how to provide safer and more affordable credit while protecting consumers from predatory lending practices.
Nate Coffman is executive director of the Ohio CDC Association in Columbus and an Ohio leader for payday loan reform.