"Payday lenders" provide - sometimes for stiff fees - an important service to some Ohioans. By offering them short-term loans secured by borrowers' next paychecks, such lenders can help some people over severe bumps in the financial road.

But they also can help imprudent borrowers to dig themselves deeper and deeper into debt. That is why some Ohio legislators want to impose controls on interest rates charged by short-term lenders.

It has been pointed out that some “payday lenders” charge interest rates as high as 400 percent on an annual basis. Lawmakers who see that as highway robbery want to place caps on interest rates; one suggestion has been to limit them to 36 percent on an annualized basis.

While we agree that some controls are needed, it also must be remembered that many “payday lenders” specialize in helping risky borrowers — people who would be turned down if they went into a bank seeking a loan, even at 36 percent interest. So, while we applaud lawmakers for their intent, we also urge them to be careful that they do not cut off a source of credit that, while hazardous if used improperly, can be an important aid to some Buckeye State residents.

Source : http://www.news-register.net/page/content.detail/id/504228.html?nav=511