Skip to main content

Search form

New Report Quantifies Fees Drained by Payday and Car Title Loans in the Buckeye State

Monday, November 9, 2015
Diane Standaert
Delvin Davis

Predatory Fees Drained from Ohio Have Doubled in Past 10 Years

According to a new report released today by the Center for Responsible Lending, payday and car title loans continue to burden Ohioans with unaffordable, triple-digit interest rate debt, draining millions of dollars a primarily from low-income people. These findings are the first look at the Ohio payday and car title lending market since Ohio voters went to the polls in 2008 to affirm capping the rate at 28% annually, a mandate which lenders have subverted through legal loopholes.

"The flourishing payday lending practices in Ohio are the ultimate case-in-point for why rules governing predatory practices must be airtight," said Diane Standaert, director of state policy for the Center for Responsible Lending. "The Consumer Financial Protection Bureau should take note – clearly, this is an industry that will find and exploit any possible angle to continue making predatory loans designed to trap Ohioans in an endless cycle of debt."

Though Ohio voters overwhelming supported a ballot initiative capping payday loan rates at 28 percent, legislative loopholes allow predatory lenders to charge interest rates averaging over 300 percent. In order to continue making triple-digit interest rate loans, payday lenders simply re-registered as mortgage lenders or "credit service organizations," thereby exempting them from the rate cap.

They did not change their business practices at all. CRL's report, Buckeye Burden: An Analysis of Payday and Car Title Lending in Ohio, found that, despite Ohio voters' affirmation of a rate cap, there are 836 storefronts in Ohio making payday or car title loans or both at triple-digit rates. CRL estimates that this drains more than $502 million in fees from the pockets of Ohioans every year.

In recent years, in Ohio and across the United States, payday and car title lenders have started offering a new kind of deceptive loan. These loans are structured with multiple payments, rather than a single balloon payment, and for terms longer than the typical 14-day or 30-day loan. For some lenders, they offer these triple-digit loans secured by access to a borrower's bank account or car for terms lasting up to two years. Despite being structured with multi-payments, the fundamental harm of making unaffordable loan payments remain.

"Our findings in today's report, showing that the majority of payday lenders now offer both payday and car title loans in Ohio, reveal how predatory lenders are doubling down on their efforts to offer harmful products," says Delvin Davis, Senior Researcher and co-author of the report. "This diversification of predatory loans is problematic."

Today's report highlights the harm caused by predatory payday and car title practices, which can and should be addressed by state-level action to enforce the voter-approved rate cap, as well as the need for strong rules, without loopholes, by the Consumer Financial Protection Bureau that effectively address the debt trap of unaffordable loans.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Millree Williams at Millree.Williams@responsiblelending.org or 202-349-1884.