Too many Ohioans fall prey to payday lenders and car titles that trap them in a cycle of debt.
Businesses refuse to pay their employees enough to pay the bills, and the big banks won’t give out small loans to help people with unexpected expenses – so Ohioans are forced to turn to these predatory lenders.
These loans overwhelm borrowers with interest rates that regularly exceed 600% and trap borrowers in a downward spiral. Over 75 percent of loans go to borrowers who take out 11 or more loans each year.
That is why I am joining a bipartisan group of colleagues in reintroducing legislation protecting all Americans from these debt traps, and this week I held a hearing on our bill, as chairman of the Senate Banking and Housing Committee.
Fifteen years ago, we passed the Military Loans Act to cap interest rates on all loans to active duty military personnel and their families at 36%.
Our bill, the Fair Credit for Veterans and Consumers Act, would extend these same protections to everyone, limiting the interest rates on these small loans to 36% or less.
It would build on the success we had this spring, overturning a rule from the previous administration that would have allowed these shady lenders to evade state laws.
States across the country, including Ohio, have recognized the need for these consumer protections and have decided to get tough. Ohio law of 2019 limits the interest these predators can charge on certain small loans.
Before Ohio law, there were over 650 payday loan or car title stores. That number is dropping now because their entire business model is about exploiting people.
The rest of the country needs to follow Ohio’s lead and we need to strengthen protections for all forms of these loans because too much of Ohio is still falling through the cracks. We know that the predatory lending industry will exploit any loopholes and use its lobbyists to fight any attempt to bring them under control.
We hear from Ohioans all over the state that car title loans are always a big deal. And these loans are particularly damaging, because they often rob people of the only tool they have to pay off the loan – if they lose their car, they lose their jobs.
Our bill would strengthen protections for everyone and protect Americans’ hard-earned money from these predators who rip them off.
Sherrod Brown (D-Ohio) represents the state in the US Senate.