Payday Lenders Fight Efforts To Cap Interest Rates

CINCINNATI -- You may have seen the commercials on Issue 5, which would restrict payday lending.

Industry supporters are gathering signatures to place a referendum on the November ballot that would overturn part of a new law that would drastically reduce the interest rates they can charge.

They’ve also spent millions of dollars on television commercials warning voters that the law would restrict options for families who need the loans, but critics are skeptical.

“I don't think there are too many farmers taking out payday loans and I don't think there are too many middle class soccer moms taking out payday loans,” said Nick Denardo of Legal Aid.

He’s working with the Coalition for Responsible Lending to prevent lenders from charging interest rates that critics describe as excessive.

The average customer takes out at least nine loans per year, and lenders are permitted to charge as much as 391 percent interest on some loans.

“That’s not a choice, it’s a trap,” Dinardo said.

Voting no on Issue 5 would permit even higher interest rates, but a yes vote keeps lenders from charging more than 28 percent on any loans.