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Thomas says she didn't read the fine print, and two months later, the loan company was threatening to take her to court if she didn't pay the loan in full. So Ruby wound up taking out another loan to pay off the first one.
Eventually she wound up juggling five loans with annual interest rates between 400 percent to 800 percent."No one explained it to me. No one made me know I was going to have to pay this large amount for borrowing money," Thomas said. and there's nothing she can do because it is all perfectly legal.
While 13 states have implemented a cap of 36 percent on the annual rate loan centers can charge, Ohio is not one of them. Mortgage counselors say that as the U.S. housing crisis gets worse some people are turning to these short-term loans with high interest rates to make ends meet.
In Ohio, where about one in 482 homes is currently being foreclosed, the industry is thriving. Pay day loan centers are opening everywhere you look. In fact, the Center for Responsible Lending says in the state of Ohio pay day loan centers now outnumber Burger Kings, Wendy's and McDonalds combined.
"People go to pay day lenders thinking this is going to get them over the hump," said Paul Bellamy, a mortgage advocate with the Equal Justice Foundation in Ohio. "In fact, it's the worst possible thing they can do. It will send them over the edge, and it is just inevitable
Source: www.abcnews.go.com |
