Cash Pay Advance

The bill caps the interest rate for payday loans at 28 percent, reduced from the current annual interest rate of 391 percent, sets a $500 borrowing limit for consumers and restricts borrowers to four loans per year. The check or automatic debit is held for up to a month, usually until the customer’s next payday, hence the term payday loan, or until receipt of a government check. After the bill was signed, the Community Financial Services Association of America, which represents payday lenders nationwide, announced a referendum to overturn the law, which effectively bans payday advances in Ohio. The lobby group said a recent Zogby International survey found 84 percent of likely voters in Ohio believed citizens should be free to make their own decisions about what kind of credit they can use, and 70 percent said the government should not be in the business of telling adults they cannot get payday loans. Payday lenders draw in borrowers who need cash before their next payday, and charge them annual interest of about 400 percent, or $50 every two weeks for a $300 loan. The industry relies on repeat loans for 90 percent of its revenue and loan terms are designed to keep that cycle going, said payday loan opponents. Find Out More

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