An Ohio Payday Loan Debate
Darryl K. Dever is a payday loan lobbyst.
Bill Faith is the leader of the Ohio Coalition for Responsible Lending and would rather see payday loans replaced with small-loan options that allow borrowers to repay over a few months.
Below, they argue their sides with one another…
What’s wrong with the current law governing payday lenders?
Dever was a key author of the law in 1995. “We put safeguards in place that are still model safeguards. We said no loan rollovers. We said you must come back the next business day to even apply for a new loan. This law has worked well,” he said.
Faith said the law does not stop borrowers from taking a instant payday loan from one store to pay back the loan from another. “The product we designed is horrible. If you can’t make money lending at 36 percent, something’s wrong with that.”
Does payday lending help people?
Dever: “They’re using the product because there is a need for it. People have short-term problems. They don’t have many opportunities and don’t have many solutions.”
Faith: “Payday lending doesn’t solve consumer financial problems. It is designed to put people in a debt trap.” He later called it “legalized loan sharking. The only difference is, most loan sharks charge less.”
Do payday customers get caught in a debt cycle, forced to use new loans to pay off old ones?
Based on a report by his group, Faith said the average faxless payday advance borrower took out more than 12 loans last year, and 90 percent of industry revenue comes from people caught in a debt cycle. “If their customers went in and got one, two or three loans per year, we wouldn’t be here today.”
Dever questioned Faith’s figures. “The study says people used more than one lender. It doesn’t say they used more than one lender at the same time. That’s purely assumption on your part. There’s no fact to that at all.”
Shouldn’t people be responsible for their own financial choices?
Faith said studies have shown that only 10 percent of payday cash loan customers don’t have other options, such as credit cards. “They bought the line of the quick, easy money.” He added: “Consumers need to make more-informed choices … there’s no question about that. It’s up to the legislature to make a fairer playing field.”
Dever said an industry-backed study of Ohio customers showed 96 percent thought payday loans were a useful service. “They are making a conscious decision of what their options are. You seem to indicate these people are incapable of making an educated decision. I believe they are.”