Payday lender and pawn shop operator Cash America recently announced it will close 43 of it's shops in Ohio.
Credit markets have been affecting store-front payday lenders who are unable to afford the additional overhead of operating a brick-and-mortar store. This is sure to increase the demand for payday loans online as their customers looks for other alternatives.
If the measure had been voted down, limits and caps on interest rates would have been eliminated, allowing 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 reduced to $1.08 (less than 10 cents a day).
"There is no way to sustain a viable store front business by offering small, short-term unsecured consumer credit at this rate," said Cash America President and Chief Executive Daniel R. Feehan, in a statement.
The company said it plans to close 43 lending shops which operate under the brand Cashland, affecting about 150 jobs.
In morning trading, shares fell $1.99, or 5.8 percent, to $32.50.
Cash America plans to book $2.5 million in charges for the closings but said that won't affect its prior profit forecast, which excluded such one-time costs. Cash America at the time predicted it would rely less on payday loans.
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