Our Stories

Toledo LISC Leads the Charge to Curb Predatory Lending in Ohio

Payday loans, with interest rates as high as 700 percent, drive low-income people deeper and deeper into poverty and suck resources out of local communities. To crack down on the high concentration of predatory lenders in Toledo, LISC helped push through a city zoning change that puts limits on payday lenders. Now, the state of Ohio is weighing similar protective legislation, and LISC is supporting employer-based small dollar loans that help workers build positive credit histories without getting trapped in debt.

The excerpt below is from:
Predatory Payday-Loan Lending, Out of Hand in Ohio and Toledo?
by David Maxwell Fine, Toledo City Paper

Darlene*, a single Toledo mom of two children who used to work two jobs and now has a Master’s degree, should have been living the American Dream. Instead, she was weighed down by the negative impact of payday lending.

Her story began with $500, the amount she initially borrowed to pay for necessities like repairing her car and the gas bill. “It took me two years to get out of that first loan. Every two weeks I had to borrow more. I had nearly $800 in bills every month. It was a crazy cycle.”.

Unfortunately, Darlene’s story is not unique. The Center for Responsible Lending (CRL) has found that 76 percent of payday loans are due to “loan churn” – where the borrower takes out a new loan within two weeks of repaying an earlier loan. This allows payday lenders to exploit dire circumstances, and that immediate need for cash creates hefty profits from outrageous fees.

State Legislation to Rein In Payday Lenders

Toledo’s State Representative, Mike Ashford, is co-sponsoring legislation, H.B. 123, with Rep. Kyle Koehler of (R-Springfield) that would revise Ohio’s lending laws. The proposed legislation would ease the burden on short-term borrowers, who often pay the equivalent of 600-700 percent interest rates. Rep. Ashford says that current laws “make it impossible to pay off loans. As a result, Ohioans are living behind the financial eight ball for a long time.”
Local organizations in support of this legislation include: Advocates for Basic Legal Equality (ABLE), which provides legal services and advocates for low-income Ohioans; the Toledo branch of Local Initiatives Support Corporation (LISC), which uses charitable lending to transform distressed neighborhoods into sustainable communities; and the United Way. Those three groups have collaborated on a Toledo ordinance that would restrict the zoning for payday lenders. Continued [+]...