State Representative Laura Lanese (R-Grove City) commended the Ohio House’s concurrence on Senate changes to House Bill 123, legislation sponsored by Reps. Kyle Koehler (R-Springfield) and Michael Ashford (D-Toledo). The bipartisan bill will reform the state’s payday lending industry and is aimed at lowering interest rates on loans and helping borrowers avoid endless debt cycles.
House Bill 123 caps interest rates at 28 percent, consistent with the limit enacted by the legislature and overwhelmingly approved by voters 10 years ago. It requires loans with durations shorter than 90 days to adhere to an income-adjusted repayment scale and creates a maximum term of one year, capping the principal loan amount at $1000.
“Yesterday, the Ohio House passed legislation that will help reform an industry that desperately needs it,” said Representative Lanese. “I’m pleased to support this bill that will provide interest relief, among other things, to some of Ohio’s most vulnerable borrowers.”
The legislation also closes loopholes and clarifies statutes regulating the payday lending industry, including the Short-Term Loan Act, to ensure payday lenders are operating under intended guidelines. Additionally, House Bill 123 prohibits borrowers from owing more than $2500 in outstanding principal at a time from multiple licensees, while continuing to protect them by limiting monthly maintenance fees to either 10 percent of the principal or $30, whichever is less. It creates further regulations by capping the overall fees for a loan at 60 percent of the principal.
House Bill 123, which seeks to protect consumers while still maintaining access to credit, now heads to the Governor’s desk for his consideration.