Payday lenders would face stricter rules under proposed constitutional amendment

Ohioans urging stricter rules for payday lenders took the first step Wednesday to put an interest rate cap and other reforms on the November ballot.

Supporters say a constitutional amendment is necessary because the Ohio General Assembly has failed to act on similar reforms introduced last year.

The proposed amendment would cap interest rates in Ohio at 28 percent and allow a $5 fee for every $100 borrowed, up to $20. It would also extend the time to repay the loan without fees to 180 days.

Supporters submitted amendment summary language to the Ohio attorney general Wednesday, starting a months-long process of qualifying for the ballot. Amendment backers will have to collect 305,591 valid signatures of registered Ohio voters by July 4 to put the measure on the November ballot.

Amendment backers Carl Ruby, a Springfield pastor, and Nate Coffman, executive director of the Ohio CDC Association, said they are still hoping legislators will pass House Bill 123, but are moving forward assuming they won’t.


Ohio voters approved a 28 percent cap set in law by the legislature in 2008. But lenders have been able to skirt that law by registering to operate under another law.

On average, borrowers in Ohio pay an effective 591 percent interest rate, the highest in the nation, according to the Pew Charitable Trusts. Borrowers often can’t repay the loan when it’s first due and roll it into a new loan. The average cost to borrow $300 in Ohio is $68 per two-week pay period, or $680 over five months.

Coffman said the amendment’s rate cap would also apply to auto title lenders, which offer short-term loans using the borrower’s vehicle title as collateral.

Short-term lenders have disputed the Pew report. Lenders say a cap would put them out of business and limit loan options for Ohioans, especially low-income people and those without bank accounts.

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