New payday lending law includes online short-term lenders
Ohioans seeking a short-term or payday loan may be hard pressed to get one come September when House Bill 545 takes effect. Many payday lenders say they'll have to close their doors because the new law greatly reduces interest rates and restricts how much and how often people can borrow money.
Some people may think they'll be able to skirt the law and get a short-term loan from an on-line payday lender. But Michelle Gatchell with the Ohio Attorney General's office said there's a section in the new law that states Internet payday lending is prohibited.
"No company may lend money under this section using mail, telephone, Internet or electronic means, which that does include the Internet," Gatchell said.
House Bill 545, which Governor Ted Strickland signed into law earlier this month, caps interest rates at 28 percent, restricts people to four loans a year and limits the amount they borrow to $500 per loan. Currently payday lenders charge about $15 for a $100 loan that's to be paid back in two weeks. That's almost a 400 percent annual interest rate.