Attorney General, Richard Cordray, speaks up in Ohio. It seems they have an issue with the new business practices of the former payday loan companies.
The big issue, at the center of all this, is that lenders are cashing checks from the proceeds of a loan for up to 10% of the face value and in some cases pressuring the borrower to do so.
The lender is put in a difficult predicament. If he does not cash the check, can he stay in business making $15-$45 per loan? The loan losses could be too much.
I spoke with an Ohio Lender and he’s annoyed with other lenders charging 8-10% to cash their own check. He makes an excellent point about convenience. He thinks the borrower should pay for the convenience of not having to wait for the check to clear in his/her account. He thinks lenders should be able to charge atleast what they charge for a government check, which is around 3%.
