The city council of Cleveland Heights in Ohio is going to vote on Tuesday as to the lifting the moratorium of more than 1 year on any new business providing loans till payday, not licensed according to the state’s Short-Term Loan Act, capping interest rates at 28%. Actually, the city is not the first to introduce the measures limiting the businesses providing money services.
Tanisha Briley, City Manager informs that the city is obliged to take the measures after the Supreme Court of Ohio allowed the companies to issue pay day loans having a mortgage lending license. As a result, it made it possible to charge triple-digit interest rates even when you need to get small online loans in Cleveland Heights.
Short-Term Loan Act should be Obeyed by Payday Lenders
Council plans to vote on a resolution obliging each payday lender obey the Short-Term Loan Act.
Some 6 years ago the lending companies appealed to the voters to cancel the Act, but they were refused and the interest limit was set at 28% at that time. As we know at present, the initiative to bring predatory payday lending to an end gains steam.
Everything Started from Neighborhood Finance vs. Scott Case
The loans under discussion are loans for a short term, and they usually have to be paid off on the consumer’s next pay day. In June 2013, the moratorium was declared while the Ohio Supreme Court considered if a lending company operated fraudulently having just a mortgage lending license in the Neighborhood Finance vs. Scott case.
Rodney Scott borrowed 500 dollars from a Cashland store, Elyria and failed to cover it in two weeks. He was sued by Cashland and the annual percentage rate equaled almost 250% including fees.
Ohio Neighborhood Finance, like the majority of other lending businesses dealing with personal loans till pay day were licensed only under the Mortgage Lending Act.
The Moratorium Was Enacted in Cleveland Height Last June
Councilman Jason Stein stated last year that the payday loan services are predatory as the “prey on those who can least afford to be taken advantage of”. The moratorium was enacted in Cleveland Heights at that time as the lenders of such kind were not welcome in the city.
Still two short-term lenders work in Cleveland Heights, they are Check Into Cash Loan Max, but as the employees inform neither of the companies provides payday loans, mostly dealing with title loans, at 24.9 % interest rate. Check Into Cash provides installment loans as well charging up to 8.5 % interest.