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Gov. John Kasich signs payday lending bill

July 30, 2018

Gov. John Kasich signs payday lending bill

COLUMBUS, Ohio – Gov. John Kasich signed a bill Monday that promises to save Ohio consumers millions in payday loan interest rates and fees.

House Bill 123 will go into effect in late October.

The Fairness in Lending Act will close a loophole that payday lenders have been using to skirt the state’s 28 percent APR on loans. The Pew Charitable Trusts says Ohio’s average rate is 591 percent, a figure the industry disputes.

The law also:

Limits loans to a maximum of $1,000.Limits loan terms to 12 months.Caps the cost of the loan - fees and interest - to 60 percent of the loan’s original principal. Prohibits loans under 90 days unless the monthly payment is not more than 7 percent of a borrower’s monthly net income or 6 percent of gross income. Prohibits borrowers from carrying more than a $2,500 outstanding principal across several loans. Payday lenders would have to make their best effort to check their commonly available data to figure out where else people might have loans. The bill also authorizes the state to create a database for lenders to consult.Allows lenders to charge a monthly maintenance fee that’s the lesser of 10 percent of the loan’s principal or $30.Requires lenders to provide the consumers with a sample repayment schedule based on affordability for loans that last longer than 90 days, the.Prohibits harassing phone calls from lenders.Requires lenders to provide loan cost information orally and in writing.Gives borrowers 72 hours to change their minds about the loans and return the money, without paying any fees.

Kasich’s signature comes as no surprise. The Republican last week indicated he was going to sign it.

At least one state lawmaker believes a portion of the bill is unconstitutional. On Monday afternoon, the industry – the Ohio Consumer Lenders Association --  said it was still exploring its options.

In 2008, the last time Ohio attempted payday loan reform, the industry took the issue to the ballot box in an attempt to get a referendum, but failed.

“We still believe this bill is not going to serve the consumers of Ohio,” said the association’s spokesman Pat Crowley. “We are exploring all our options right now because our customers want us to.”

A bipartisan coalition of faith and civic leaders, Ohioans for Payday Loan Reform, railed around the bill and pushed for its passage.

We’ve received word that Gov. @JohnKasich signed #HB123 today! Ohioans taking out payday loans will benefit from lower rates and fees, reasonable payment size, and adequate time to repay.— OhioPaydayLoanReform (@ohpaydayreform) July 30, 2018

H.B. 123 was introduced in March 2017 and stagnated in a committee for over a year. Then Speaker Cliff Rosenberger resigned from the Ohio House amid an FBI probe into his travel with the industry. Then the bill was rocketed out of the House and Senate months before the November election.  

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