In Ohio Cash America Decided To Shut 43 Payday Loan Shops

Payday loans lender and pawn shop operator Cash America International Inc. stated that from Wednesday it will to close about one-third of its Ohio lending locations in the next few months, after voters in the state decided to maintain new payday loan restrictions.

Voters on Tuesday sanctioned a new payday lending law that slashes the annual percentage rate that lenders can charge to 28 percent and restricts the number of loans customers can seek out to four per year. It is among the strictest laws in the country. Its supporters say cash advances are faulty products that trap borrowers into a cycle of debt.

If the measure had been voted down, restrictions and caps on interest rates would have been eradicated, letting lenders to charge rates and fees that amount to a 391 percentage annual percentage rate. Under the HB 545 bill, the fee charged on a $100 two week loan is now diminished to $1.08.

According to Cash America President and Chief Executive Daniel R. Feehan, in a statement "There is no way to maintain a feasible store front business by offering small, short-term unsecured consumer credit at this rate."

The company stated that it plans to close 43 lending shops which operate under the brand Cashland, affecting about 150 jobs. While, in morning trading, shares dropped $1.99, or 5.8 percent, to $32.50.

Cash America plans to book $2.5 million in charges for the closings but revealed that it won't affect its prior profit expectation, which excluded such one-time costs. Cash America at the time predicted it would rely less on payday loans.

ash America revealed that Wednesday the remaining Ohio locations will start providing services beyond payday loans like short-term unsecured loans governed by a different statute. Some locations also will purchase gold and operate as pawn shops.

However, Cash America which had 926 locations total, also said a ballot measure failed in Arizona that would have extended a cash advance statute beyond July 2010.

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