Cash America Loses on Election Day

Company says Ohio vote forces them out

Thursday, Nov 6, 2008  |  Updated 2:12 PM CDT
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Cash America Loses on Election Day

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Cash America will close 43 stores in Ohio after a vote on payday loan restrictions

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Fort Worth-based Cash America announced it will close 43 stores in Ohio after voters chose to keep payday loan restrictions in place.

Daniel Feehan of Cash America says the Ohio bill calls for an annual rate cap of 28 percent, which is not economically feasible for store front providers of small short-term loans.

If the measure had been voted down Tuesday, limits and caps on interest rates would have been cut, allowing lenders to charge rates and fees that amount to a 391 percentage annual percentage rate.

Under the new law, 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 Feehan, in a statement.

Cash America plans to book $2.5 million in charges for the closings but said that will not affect its prior profit forecast.

Analysts expect earnings of $3.11 per share for 2008 and 2009 earnings of $3.40 per share.

Currently, Cash America operates more than 900 stores across the country.

 

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