WARREN, Ohio (WKBN) – Many Americans don’t have enough money in their savings account to cover a $400 emergency expense, and they are turning to payday and title loan lenders for the extra cash.
Christina Sarno is in debt. She is a single mom who was trying to make ends meet when she says she turned to both payday and car title loans. She said she could never afford to pay more than the interest on the loans.
“It’s actually like a revolving door with them,” she said. “You know, it’s just like a never-ending thing, ’cause you think you’re going to get ahead, then it’s like, ‘Well, if I don’t do this, like, I’m not going to make ends meet, you know what I’m saying? So it’s just like a vicious cycle.”
Sarno is not alone.
In the United States, there are more payday lending stores than McDonald’s or Starbucks franchises. A 2014 study by the Consumer Financial Protection Bureau found that four out of five payday loans are rolled over or renewed, and 836 storefronts in Ohio are generating more than $500 million in loan fees each year – twice as much as they collected in 2005.
Senator Sherrod Brown joined Sarno to speak to Warren leaders at the YWCA on Monday. He discussed predatory loan companies as well as the Trumbull County United Way/Trumbull Partnership for Financial Empowerment, which works to give people the education they need to make smart financial decisions.
He said payday and title loan lenders keep low-income people in a cycle of debt by preying on them. He is now leading an effort to protect customers from unscrupulous lenders.
Earlier this month, the Consumer Financial Protection Bureau proposed new guidelines that would force payday lenders to find out if borrowers can afford to pay back their loans before issuing them. It would also cut off repeated debit attempts from the lenders, which rack up bank fees.
Just days after the Consumer Financial Bureau announced its restrictions on predatory lending, the Republican-led House Appropriations Committee advanced a bill that would block the consumer agency from implementing the new rules. Democrats opposed the legislation, and that bill is now awaiting action in the full House.
Brown says Consumer Financial Bureau’s proposed rules combat deceptive and abusive practices in the payday-title loan market.
“Most importantly, it will mean better disclosure to the customer what you’re doing. The lender needs to look at the records of the customer to know that the customer has the ability to pay it back,” he said.
He added that he is not trying to put payday lenders out of business, but he said he wants them to “treat the public better.”
A public comment period on the proposed rules ends September 14. Brown is encouraging Ohioans to comment by emailing FederalRegisterComments@cfpb.gov (Docket No. CFPB-2016-0025), visiting http://www.regulations.gov, or sending a letter to Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NE, Washington, DC 20002.
Brown is urging anyone who has had a bad experience with a payday lender to share their story. They can do so at www.responsiblelending.org.
First News reached out to several loan companies in the area for comment, but none have called back at this time.