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Toledo mulls limiting payday loan firms

Proposal to toughen zoning restrictions

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    A zoning change proposed would limit any new such payday lenders to one for every 30,000 Toledoans and require at least 2,000 feet between each.

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A zoning change proposed would limit any new such payday lenders to one for every 30,000 Toledoans and require at least 2,000 feet between each.

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City of Toledo officials are mulling a plan to clamp down on future payday and short-term lenders — a move other cites have already taken and financial coaches applauded.

The zoning change proposed — written by George Thomas, an attorney at Advocates for Basic Legal Equality, Inc. and sponsored by Toledo Councilman Cecelia Adams — would limit any new such lenders to one for every 30,000 Toledoans and require at least 2,000 feet between each.

“Toledo, like many other cities, is very prone to a glut of short-term lenders that offer very predatory loans,” said Joe McNamara, an attorney for the city.

“These fees accumulate, and you can get anywhere from 100 to 500 percent interest on these loans,” he said.

There are 37 short-term and auto title lenders operating in the city alone, which means there is about one for every 7,630 city residents.  

Mr. McNamara said they operate in low-income areas.

Existing payday loan lenders in the city would be “grandfathered in” under the law change. If such a lender would close, it could not reopen if the new limits prohibit such a business, he said.

Mr. Thomas said people get sucked into predatory loans.

“As a common example, if a borrower takes out a loan for $300 and the service charges a $15 fee for every $100 borrowed, the total charge at the end of two weeks is $345,” said Mr. Thomas in a summary statement of his proposal. “If the borrower cannot pay the $345 that quickly, the lender offers to extend the loan, and the borrower pays an additional $45 fee for the extension for a total of $390. The borrower cannot afford these quickly escalating fees, extends the loan again, and faces perpetually increasing fees. Falling behind on the loan, even one as small as $300, begins a vicious cycle of debt.”

A 2014 Consumer Financial Protection Bureau study found 80 percent of payday loans are rolled over or renewed within two weeks, which leads to more fees and higher rates.

Mr. Thomas said 2008 reforms in Ohio placed a cap on payday loan interest rates at 28 percent, but Ohioans still pay some of the most expensive rates in the nation because of “loopholes in the law.”

In June, 2015, the Ohio Supreme Court sided with payday lenders in a unanimous ruling that the state’s Short Term Lending Act did not bar payday lenders from using other lending licenses to issue payday loans.

Representatives for Cash Plus Inc., Advance America, and National Cash Advance, which operate in Toledo, did not return phone calls seeking comment.

Amy Cantu, director of communications and research for the Community Financial Services Association of America, an industry group for payday and small-dollar lenders, did not return phone calls and emails seeking comment.

Michelle Gorsuch, a financial coach and site administrator for ProMedica’s Financial Opportunity Center at 1806 Madison Ave., said she has “already had an influx” of people seeking help after taking such loans since the center opened in July.

“I have 102 clients, and I would say at least 20 of those had some predatory lending problems,” Ms. Gorsuch said.



“I had one women on a fixed income ... and she was wrapped up in three different payday loans,” she said. “She was no longer able to pay her rent. I would never recommend any payday lender, cash advance, or title loans.”

Vanessa Seymore, 63, a retired Mercy St. Vincent Medical Center unit clerk, said she didn’t know her credit was good enough for a regular bank or credit union loan.

“I figured my credit was bad because, at one time, I filed bankruptcy,” Ms. Seymore said. “If I had a financial counselor, I would have checked.”

Now, she has an auto title loan and a short-term loan, and high interest rates on both.

Other Ohio cities have approved zoning ordinances such as the one proposed in Toledo to restrict and limit the sites of short-term lenders.

In Cleveland, the businesses are limited to one per 20,000 residents and 1,000 feet from another such business.

The city of Xenia, Ohio, has a 5,000-foot distance requirement between each payday lending, cash advance, check cashing, or nonchartered financial institution.

Cuyahoga Falls, Ohio, restricts them to one per 10,000 residents and does not let them open within 1,000 feet of each other.

Toledo City Council this week sent the proposal to the city plan commission before council reviews it again.

Contact Ignazio Messina at: or 419-724-6171 or on Twitter @IgnazioMessina.

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