WKSU News: State appeals court shoots down payday lenders 250 percent interest rate

Monday, December 3, 2012 State appeals court shoots down payday lenders 250 percent interest rate Northeast Ohio court says mortgage exception doesn't apply; case is likely to go to the Ohio Supreme Court by WKSU's M.L. SCHULTZE	Web Editor M.L. Schultze

In The Region:

A state appeals court says payday lenders cannot get around caps on interest rates by using the state’s mortgage lending law. WKSU’s M.L. Schultze has more on a decision today that is likely to make a run at the Ohio Supreme Court.

SCHULTZE: 9th District decision

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The 9^th District Court of Appeals sided with a Lorain magistrate in shooting down what amounted to an annual interest rate of nearly 250 percent.

State law has capped rates on short-term, or “payday,” loans at 28 percent since 2008. The parent company of Cashland had claimed that its mortgage lending license exempted it from the cap. And it tried to collect.

But when the case went before Lorain Magistrate Richard Schwartz, he said Cashland was entitled to just 8 percent interest. And the 9^th District Court of Appeals -- which covers Summit, Lorain, Median and Wayne counties – has now agreed.

Payday lenders tried to challenge the short-term rate caps in other court cases and at the polls. After Ohio voters overwhelmingly upheld them, an increasing number of the lenders have gotten mortgage licenses, which they say exempt from the short-term loan limits.

So far, state lawmakers have not addressed the issue, and the 9^th District case is expected to be appealed to the Ohio Supreme Court.

Listener Comments:

Too much usury. The law needs to intervene in
such establishments. These amount to legal loan-
sharking operations. They are as bad as Sallie
Mae on school loans. A person falling into such
a trap will never get out ... safely.

Posted by: Yar Mag (Akron) on December 11, 2012 8:12AM

You know I also think that payday lenders simply should not demand ridiculously high interest rates. I do understand that this service for created for super fast usage, but they try to rip people off on one hand. One the other hand, people may not use this service so that there were no problems. It is going to be better to go to credit unions or maybe to banks, does not matter. Payday loans (check out this website: http://paydayloansat.com/) isn’t a must for any of us.

Posted by: Cassy (New York) on December 10, 2012 3:12AM

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