Payday lending reform necessary


Rep. Steve Huffman - Guest Columnist



In the legislature, we have been working tirelessly for years on an issue that has affected many of Ohio’s families: the predatory practices of the payday lending industry. Payday loans are a type of short-term borrowing with high levels of interest based on income and credit. Approximately one million Ohioans have utilized payday loans, experiencing exorbitantly high interest rates and fees that often cause them to take out more loans to pay off old ones.

House Bill 123 aims to end these practices while still maintaining access to credit for many hardworking consumers. For example, borrowing $300 over five months in Ohio can result in interest and fees up to $680, and that’s not including the original amount to pay back. The terms and conditions attached to these particular loans are keeping Ohioans stuck in a loan contract, unable to pay off the increasing interest costs.

Essentially, the legislation modifies Ohio’s short-term loan law to clarify the types of loans a licensee can make, the loan cost, eligibility of a borrower, internet lending, and more. It restricts loans to 30-day intervals with a maximum term of one year, capping the principal at $1000. Additionally, all loans under 90 days cannot have monthly payments more than 6 percent of the borrower’s monthly income.

Moreover, the bill prohibits borrowers from owing more than $2500 in outstanding principal at a time, while continuing to protect them by limiting monthly maintenance fees to either 10 percent of the principal or $30, whichever is less. It makes further regulations by capping the overall cost of a loan at 60 percent of the original amount.

House Bill 123 is a technical bill that makes numerous reforms to the payday lending industry. It’s been the result of collaboration between the House and Senate, industry leaders, and consumers, and the final product balances the needs of the industry with consumer protections. Through these provisions, I am hopeful that Ohioans will no longer be subject to these predatory methods and will have the opportunity to reasonably pay off their short-term loans.

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Rep. Steve Huffman

Guest Columnist

Steve Huffman is serving his second term as state representative for the 80th Ohio House District, which covers Miami County and parts of Darke County. He also is the former Miami County Coroner.

Steve Huffman is serving his second term as state representative for the 80th Ohio House District, which covers Miami County and parts of Darke County. He also is the former Miami County Coroner.