Ohio Law Impact on Payday Loans
The issue of payday lending has been expanding from a financial issue to a government one. Politicians in the U.S. and U.K. are exploring this type of lending, and discussing new potential regulations and laws. In some states, payday lending is actually illegal (though online options are still available) and members of the U.K. Financial Conduct Authority have warned payday lenders in the country that more supervision should be expected. However, is this the direction regulators should be going in by tracking payday lenders? One finance expert says no.
At the end of last year, Lawrence Meyers, president of PDL Capital in Los Angeles, wrote an op-ed for the Columbus Dispatch in response to Dispatch legislative reporter Thomas Suddes’ piece about a current Ohio law restricting the rates on payday loans, more or less banning them. Meyers explained that the interest rates of payday lending – generally what politicians claim is the negative side of payday loans – is by no means the highest of all loans. While the rates are higher than some, online payday lenders, bank overdraft fees and loan shark rates are often much higher than the interest rates used for payday loans. Even so, both continue to be legal and overlooked by lawmakers. Another reason to look into payday loans, Meyers explains, is that these loans are not a new invention. If this was a bad option, the loans would not exist.
“Payday loans have existed for 23 years,” Meyers wrote. “If they were as awful as Suddes and other critics claim, the customer pool would have dried up long ago. Instead, 12 million people annually make the free and informed choice to use payday loans. They return to use it when needed – not because they are stupid, but because it works for them.”