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LWV League of Women Voters of Ohio Education Fund
Smart Voter
State of Ohio November 4, 2008 Election
Issue 5
Making changes to check cashing lending
State of Ohio

Referendum - Majority Approval Required

Pass: 3,391,282 / 63.60% Yes votes ...... 1,940,951 / 36.40% No votes

See Also: Index of all Issues

Information shown below: Summary | Yes/No Meaning | Arguments |

Substitute House Bill 545 (H.B. 545), which was passed by the Ohio legislature and signed into law by the Governor, substantially changed the law regulating how certain lenders in Ohio operate. Under the referendum, voters must decide whether Section 3 of H.B. 545 should go into effect. Section 3 of H.B. 545 deletes the old provisions of the law regulating check cashing lenders, sometimes known as "payday lenders," in favor of the new provisions.
1. If a majority of Ohio voters approve Section 3 of H.B. 545, all short term lenders, including check cashing lenders, would be subject to the following limitations: The maximum loan amount would be $500; Borrowers would have at least 30 days to repay the loan; and The maximum interest rate would be 28% annual percentage rate (APR) on all loans.
2. If a majority of Ohio voters reject Section 3 of H.B. 545, check cashing lenders would be allowed to continue under previous law as follows: The maximum loan amount would continue to be $800; There would continue to be no minimum repayment period; and Check cashing lenders could continue to charge rates and fees, resulting in a total charge for a loan that substantially exceeds an equivalent APR of 28%.

Voters are being asked if they want to uphold the legislature's repeal of lenders' authority to charge interest that could be as high as 391%. If the referendum is approved (the "yes" votes prevail), all short-term lenders, including payday lenders, would be subject to the following limitations:

o Cap the interest that payday lenders can charge consumers at 28%. o Limit the amount consumers may borrow from payday lenders to 25% of their monthly income, up to $500 per loan. o Limit consumers to four short-term loans per year. o Provide for a minimum of at least 30 days for a borrower to repay a loan.

Meaning of Voting Yes/No
A YES vote on this measure means:
you approve of Section 3 of H.B. 545, and want to limit the interest rate for short term loans to 28% APR and change short term lending laws

A NO vote on this measure means:
you disapprove of Section 3 of H.B. 545 and want to permit check cashing lenders to continue to be able to offer short term loans as currently permitted

  Official Information

Secretary of State

News and Analysis

WCET-TV Channel 48 (Cincinnati)

WKRC-TV Channel 12 (Cincinnati) Google News Search General Links

The Protect HB 545 Committee
In support of placing new restrictions on payday lenders

The Committee to Reject HB 545
Against placing new restrictions on payday lenders
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Arguments For Issue 5 Arguments Against Issue 5
1. The new regulations would cap the interest for payday loans at 28%, which effectively ends lenders' ability to charge up to 391% interest.
2. Limiting the number of loans customers can take out annually would help break the cycle of debt in which many customers find themselves trapped. Data show that 99% of payday loans go to repeat borrowers--who typically take out 12 or more loans a year.
3. Passage of Issue 5 would give borrowers more time to repay a loan--and by limiting the amount a consumer can borrow, would help insure that customers do not borrow more than they can afford to repay.

1. The 28% ceiling on interest rates will not allow lenders to make enough profit to stay in business; lenders will be forced to close locations convenient for borrowers and jobs will be lost.
2. The loans provide emergency assistance to cash-strapped borrowers who have no other credit options--and the loans are more affordable, if repaid promptly, than bank overdraft fees and credit card late fees.
3. A borrower's choice is limited if the number of loans available in a year and the amount of each loan are curtailed. Each borrower should have the right to make their own financial decisions without government restrictions.

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Created: January 24, 2009 10:48 PST
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