In Ohio, the demand for payday lenders will not be going away anytime soon. There are over 1300 payday lending companies currently thriving in the state. Ohio has fallen into being one of the top states where residents use payday loans most often, Oklahoma being the highest. On average, a regular borrower will take out about eight loans each year. The loans average about $375 each which will carry with them over $500 in fees. The longer a customer keeps out the loan, the greater the amount in fees will be paid.
Ohio has set some state guidelines in which direct online payday lenders as well as “brick and mortar” lenders will have to follow. These regulations are more permissive than other states which gives the payday lending companies more freedom than the stricter states. Online lenders will need to obtain a license in order to operate within the state. This regulations will help to deter fraudulent companies from loaning to its residents. A borrower will have to understand their rights as residents of the state in order to know what to look for when shopping for online payday loan lenders.
Permissive states will allow their residents to take out single-payment loans which carry a percentage rate of 391 or higher. Ohio has capped the annual percentage rate at 28 percent. Some lenders have found a way to skirt this rate by operating under the Small Loan Act or Mortgage Loan Act which allows the lenders to charge higher rates.
Borrowers in Ohio tend to be young, have low income and rent their home. Most do not have a four year college degree. Just over half of these borrowers are women and a slightly higher percentage show that the borrowers are white. On average, the majority of those who use payday loans are white woman from 25-44 years in age and do not own their own home. Renters use payday loans more than home owners.
It is no secret that the direct payday lenders will provide fast and easy cash to those who qualify. States with more permissive regulations are still seeing higher numbers of residents using payday loan lenders to help with finances. Those states with hybrid regulations (seeing both strict and permissive rules) have a small percentage fewer of residents using the loans. Restrictive regulations sees a significant drop in lending practices. People are finding other ways to get help with their finances when the lenders have more restrictive practices. Curbing the amount of loans which an individual may take out at one time or within the same twelve month period is definitely a regulation keeping residents from returning to the lender for multiple loans each year.
Too many individuals are falling into the personal trap of not wanting to cut costs and therefore are choosing to use the high risk loans. Payday loan lenders do not request information about what the money will be used for, leaving the borrower freedom to use the money as they see fit. There still lies problems with this area as too many borrowers continue to use the short-term payday loans for wants instead of needs.