Too many Ohioans fall prey to payday and car title lenders that trap them in a cycle of debt.
Corporations refuse to pay their workers enough to pay the bills, and the big banks won’t make small-dollar loans to help people with unexpected expenses – so Ohioans are forced to turn to these predatory lenders.
These loans saddle borrowers with interest rates that regularly top 600 percent, and trap borrowers in a downward spiral. More than 75 percent of loans go to borrowers who take out 11 or more loans each year.
It’s why I’m joining a bipartisan group of colleagues to reintroduce 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 Lending Act to cap interest rates on any loans to active-duty servicemembers and their families at 36 percent.
Our bill, the Veterans and Consumers Fair Credit Act, would expand those same protections to everyone, limiting interest rates on these small-dollar loans to 36 percent 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 all over the country, including Ohio, have recognized the need for these consumer protections, and moved to crack down. Ohio’s 2019 law limits the interest these predators can charge on some small-dollar loans.
Before Ohio’s law, there were more than 650 payday or car title loan stores. That number is down now – because their entire business model was built on 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 many Ohioans still slip through the cracks. We know the predatory loan industry will exploit every loophole, and use its lobbyists to fight every attempt to rein them in.
We hear from Ohioans all over the state that car title loans are still a big problem. And these loans are particularly damaging, because they often rob people of the only tool they have to pay back the loan – if they lose their car, they lose their job.
Our bill would strengthen protections for everyone, and protect Americans’ hard-earned money from these predators that rip them off.
Sherrod Brown (D-Ohio) represents the state in the U.S. Senate.