Posted on 11/07/2008 7:44:48 AM PST by BGHater
Payday lender and pawn shop operator Cash America International Inc. said Wednesday it will to close about one-third of its Ohio lending locations in the next few months, after voters in the state chose to maintain new payday loan restrictions.
Voters Tuesday approved a new payday lending law that cuts the annual percentage rate that lenders can charge to 28 percent and limits the number of loans customers can take out to four per year. It is among the strictest laws in the country. Its backers say cash advances are defective products that trap borrowers into a cycle of debt.
If the measure had been voted down, limits and caps on interest rates would have been eliminated, allowing lenders to charge rates and fees that amount to a 391 percentage annual percentage rate. Under the HB 545 bill, the fee charged on a $100 two week loan is now reduced to $1.08 (less than 10 cents a day).
"There is no way to sustain a viable store front business by offering small, short-term unsecured consumer credit at this rate," said Cash America President and Chief Executive Daniel R. Feehan, in a statement.
The company said it plans to close 43 lending shops which operate under the brand Cashland, affecting about 150 jobs.
In morning trading, shares fell $1.99, or 5.8 percent, to $32.50.
Cash America plans to book $2.5 million in charges for the closings but said that won't affect its prior profit forecast, which excluded such one-time costs. Cash America at the time predicted it would rely less on payday loans.
The company on Oct. 23 forecast full-year earnings between $3.07 and $3.11 per share, a tightening of its forecast from July.
(Excerpt) Read more at businessweek.com ...
err..28%
This outfit also processes Western Union funds transfers to, uh, foreign countries.
Well there’s a surprise... considering their default rate has to be 20-25% if you can’t charge 400% APR there’s no money to be made.
Guido has better rates........
Guido offers better rates than these companies. And he won’t loan you more than you can pay back.
I hear "Guido" charges less...
I was hassled (lightly) two months ago...some shady begger took out payday loans from two different chains a mile from where I work, and used my cell phone number as a call back. I won't go into the "creative" calls I got looking for her, and they have (mostly) stopped, but you would think that you would require a driver's license for ID and would actually check up on the customer's phone number BEFORE they default on the loan...
Anyway, the first commercials for this had a hardworking, flannel-clad farmer type (who looked like W, to me at least) going on about how "Issue six is going to keep people like you and me from getting money when we need it" sponsored by "Americans for freedom of Credit" or some such. When that had no legs, they began wailing about "The job killing amendment"..."We have lost thousands of jobs in Ohio, and now they want to shut down 6000 more!" with no mention at all that the 6000 were the usurious Payday loan clerks. Finally, they tried "the government wants to require you to submit your social security number when you do business transactions...and yet THEY lost dozens of laptops full of your private information last year!"
The whole thing was about charging outrageous rates, as evidenced by a business that could, on only an apparent 6000 payroll, afford to fund hundreds of TV commercials.
This was almost my only crumb this election cycle...a pleasure to see them go down. Every time I pass one now, I go "Haw-HAW! You got regulated!"
They lost big in Arizona, too.
>>considering their default rate has to be 20-25% if you can’t charge 400% APR there’s no money to be made.<<
And people had a right to go there or not.
This law in OH is stupid and just making people stupider. These loan places and Rent a Centers were just voted out. OH with few jobs to spare just put thousands out of work.
If one goes to a place with a 28% interest rate, they are STUPID. If instead of putting a cap, OH had said that the interest rate and full pay off amount was to be in red at the top of the contract, it would have put many of these places on alert and brought it down.
Along with that, it would have taught people not to be so stupid.
Now those jobs are gone.
Did anyone have a gun to a person’s head to take out these loans?
No.
Ohio just gave a blankey to the lame.
Here's the bottom line. If you are a business that does something unethical but not illegal you should fully assume that at some point it is going to be be made illegal. The risk of establishing the business at that point is your own.
AZ voted to let the payday loan industry go out of business. They will soon no longer be able to operate here. The payday people were trying to get the laws “revamped” so they could stay, but they were defeated.
I don’t have much sympathy for these businesses but the notion that they are “trapping” people is just more evidence that the American people have completely given up on personal responsibility. The poor little sheep are “trapped” by these finance companies, “trapped” by mortgage lenders, “trapped” by credit card companies, “trapped” by just about anyone who holds them to account for their stupid decisions.
We want it all and want someone else to pay for it—and we’ve just elected a president who is on board with that program.
Back when I was a lot worse off monetarily, these loan places helped me out on occasion. I’d get something like $150 for about $20 on a two week repayment. It helped me in the winter when the gas almost got turned off. I’m sure I’d “floated” a check and found that the loan fee was less then the bounced check fee. I wonder what that interest rate is when it’s annualized?
I was young, and probably not very bright. But I made an adult choice to use these services. I paid every penny they asked for. My heat stayed on, and my checks cleared without bouncing.
I’m sad to see that we can simply vote to close down companies we don’t necessarily like.
Was there a measure like this in AZ? Sheesh there is a payday loan place on every corner. If not for them, the strip malls would have 1/3 more vacant spaces.
I live in Ohio and voted in favor of the Cash Advance businesses. Yes, they take advantage of people. But, do you know why I voted the way I did? Because I am sick and tired of nanny-staters. Can’t smoke in bars, can’t have casinos, can’t borrow money through free choice. I want to be left alone. And I’ll oppose every nanny-state proposal in the future.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.