Crescent-News.com - Limited interest closes doors at some area lenders

By JARED ORZOLEK

Dozens of "payday loan" stores across Ohio have announced they will close following passage of a statewide ballot issue that affirmed a state law limiting the interest rates these institutions can charge.

These stores dot northwest Ohio towns under names like Cash Land, Check Into Cash and Barbara's Financial Services.

Some will continue to do business under a new business plan, while others have already closed.

The ballot issue which has impacted these businesses was decided in the general election held earlier this month.

Issue 5, which was approved by voters by a wide margin, allows a law to stand which cuts the annual interest rate these loan providers can charge from more than 300 percent to 28 percent. The law takes effect Nov. 26.

A local company that operated under the name of Barbara's Financial Services LLC is no longer in business following the payday loan law.

The company operated stores in Napoleon, Defiance, Wauseon and Archbold, but only its Second Street location in Defiance was staffed this week. A customer service representative at this location said that she was unsure if the business would re-open in the future.

Check Into Cash, which operates stores at 1007 N. Clinton St. in Defiance, 1857 Scott St. in Napoleon and 1233 S. Main St. in Bryan will not close any of its stores at this time.

The First American Cash Advance store, located at 1255 N. Scott St., Napoleon, will also remain open.

Run by Cash America International Inc., Cashland, which has offices on Clinton Street in Defiance and Scott Street in Napoleon, has announced that 43 or its 140 Ohio stores will close in coming months, but only 25 of the 43 stores to be shut down has been announced.

Neither the Napoleon or Defiance store was on the list of the 25 initial stores to close.

"We respect the democratic process and thank the voters who came out to the polls to support the cash advance product," said Daniel R. Feehan, president and chief executive officer of CashAmerica International.

The Cashland locations that remain open will begin offering customers alternative services including short-term unsecured loans along with pawn shop services such as gold buying.

"This was a hard fought loss for the industry, but more importantly it will hurt consumers who have nowhere else to turn for short-term credit and they will incur higher costs associated with bank overdraft fees, late fees and penalties on items such as utility bills and credit cards," said Feehan.

Some Ohio payday loan stores have sought to offer loans under the Small Loan Act, which allows loans of up to $5,000 with an interest rate of up to 25 percent and an origination fee of 1 percent of the loan or $15.

Stores may also be able to offer products under the Ohio Mortgage Act, which limits interest rates to 25 percent, but allows an origination fee and does not stipulate a maximum amount.

1.	Posted by dede November 22, 2008
	Some would say that having these cash loan places closing will hurt consumers; possibly, but perhaps if the banking industry would offer these same consumers an alternative. My husband and i were caught in the "trap" of using the cash loan places, we didn't like to, but we had NO CHOICE like so many others. He is ill and cannot work, at the end of this month he is going to have his second cancer surgery and after that, who knows. My paycheck just doesn't pay the expenses of running our household no matter how hard we try to scrimp. Our credit is crap because of past problems so no bank or other lending institution will give us a loan. Our alternative was to get a loan through my mom, at her bank and we pay off the loan over time.