My Thoughts About This Article: Yes payday loans might be "undesirable" for many people have, in re...

1. FOXNews.com - Defeated in Ohio, payday lenders look for
options - Business And Money | Business News
My Thoughts About This Article:
Yes payday loans might be "undesirable" for many people have, in reality this is actually the only
option. Thus can you somewhat the consumer get without warmth for that week or ask them to pay
an insane interest-rate? From the legal standpoint they're having no issue although for me it is a
phone that is challenging. Lawmakers are planning to crackdown on payday lenders.
FOXNews.com - Defeated in Ohio, payday lenders look for options - Business And Money | Business
News | Financial News
Thursday, November 13, 2008
By LISA CORNWELL, Associated Press Writer
ADVERTISEMENT
CINCINNATI --
The payday loan industry _ stung at the Ohio ballot box with a strict new law _ is looking for other
ways to do business, prompting consumer advocates to worry that lenders are finding a way around
the election results.
Lenders are focusing more on services like pawn brokering and gold buying, and some are applying
for licenses under other Ohio loan laws. Consumer advocates plan to take a close look at what
lenders are doing.
Payday loans work this way: A borrower goes to a check-cashing company and writes a check. The
company gives the person cash, minus a fee, and agrees not to cash the check until his or her
payday.
Voters on Nov. 4 approved a new law that cuts the annual percentage rate that payday lenders can
charge from an average 391 percent annual rate to 28 percent, and limits the number of loans
customers can take to four per year. It is among the strictest laws in the country.
"Whenever states reject payday lenders, they try to find other ways to keep trapped customers
coming back to their stores to keep generating the same fee income off of them," said Uriah King,
policy associate for the Center for Responsible Lending that lobbies against payday lending. "They
look to other laws, rename their product or rename a fee, saying it's not a fee but just a service."
Since May, six months before Election Day, the state has received 568 applications from payday
lenders seeking to provide loans under the Ohio Mortgage Loan Act. There also have been 702
applications from lenders interested in offering loans under the Small Loan Act.
The Small Loan Act governs non-depository lenders who make loans up to $5,000 not secured by
liens against real estate. Lenders can calculate interest by charging a maximum 25 percent on the
entire loan amount or 28 percent on the first $1,000 and 22 percent on the remainder of the loan up

2. to $5,000.
The Ohio Mortgage Loan Act governs lenders who make unsecured loans and loans secured by real
estate or other personal property. The maximum rate is 25 percent with no loan amount limit.
But both of those laws allow lenders to charge origination fees that would increase the annual
percentage rate. For example, lenders under the Small Loan Act can charge a fee of $15 or 1
percent of the loan amount _ whichever is greater _ for loans of $500 or less.
Fort Worth, Texas-based Cash America International Inc. will offer an alternative short-term loan
under the Ohio Mortgage Loan Act. Spokeswoman Yolanda Walker said it is not an attempt to go
around the election results.
"We just can't go with the 28 percent rate cap, so we will try this and see how it works," she said.
Check'n Go, based in Cincinnati, has applied for licenses under the Small Loan Act, but hasn't
determined how feasible the new product would be over the long term, said spokesman Jeff
Kursman.
"Whether the customer is going to be interested in taking advantage of it, whether it has
marketability and whether it will provide enough revenue to keep the lights on are questions still to
be answered," Kursman said.
Check'n Go is trying to meet consumer demand for credit products and keep its workers employed
by doing what Ohio law allows, he said.
Both Check'n Go and Cash America International said they would close many of their locations in
Ohio in the wake of the vote.
More than a dozen other states and the District of Columbia also have laws cracking down on payday
lending. Arizona voters on Nov. 4 rejected a ballot initiative paid for and written by the loan
companies to allow them to continue charging high interest rates on small loans.
Jason Arnold, an RBC Capital Markets research analyst, said the recent aggressive stances taken by
Ohio and other states against payday lending have made it tougher for the industry.
"I'm not even sure the companies themselves know how successful these alternative programs will
be," said Arnold. "If it's profitable to operate under these other pieces of legislation, they will do it. If
not, I imagine a lot of them _ especially the smaller operations _ will just close up shop."
Michael Evans, 61, of Cincinnati, hopes that won't happen. Evans, who voted against the rate cap,
said payday loans have helped him through some tough times.
"These loans have let me keep some money in my pocket between paychecks when I'm running low,"
said Evans. "I would be hurting if they close."
___
On the Net:
Center for Responsible Lending: http://www.responsiblelending.org

3. Community Financial Services Association of America: http://www.cfsa.net
Copyright 2008 The Associated Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
http://www.foxnews.com/printer_friendly_wires/2008Nov13/0,4675,PaydayLending,00.html
Closing Thoughts:
As you are able to begin to see the news source above says regulators are prepared to crack the
whip on payday loan lenders. I am wondering what you're thoughts are on this?