We've Got An Usurious Problem Here

Ohio's Payday loan usury law is expected to go into effect next month, and the battle is on between the loan industry and Ohio Governor Ted Strickland.

Ohio, having dealt a blow to its payday loan industry by enacting a usury law, is teeming with charges of deceit in a petition drive to reverse the law.

HB 545 was signed in June by Governor Ted Strickland, and will go into effect in early September. Under the law, the APR for a payday loan will be capped at 28%, and an Ohioan would be limited to four loans per year. Opponents of the legislation argued that outlawing such small, short-term loans, with an APR of up to 391%, will eliminate 6,000 jobs in Ohio and force as many as 1,500 statewide store locations to close.

If an industry needs 391% interest to operate, there's a problem...and the 6,000 jobs is a bluff. After all, just across the river in Kentucky payday loan centers are all over the place, and the interest rate? 459%.

It's a scam, preying on the poor and uniformed. $15 on every $100 borrowed for a finance charge, plus $17.59 in service fees? Those fees pile up every two weeks. It's legalized loan sharking and it's good, good business, because in Northern KY near Cincy where I live, there's a good 6 or 8 of these places within a couple square miles, and not just the poor parts of town. Any strip mall in Florence or Covington or Crescent Springs has one. Some have more than one. And more and more people are turning to these places and getting wiped out, having to take out loan after loan after loan to keep up.

In KY a $500 payday loan gives you two weeks to pay back about $675. If you don't, the fees start adding up frighteningly fast. And it's all legal. Ohio put a stop to it. Kentucky needs to do the same now that Steve Beshear is in charge.