Payday Loans and Cash Advance in Ohio

Legal with 28% interest plus capped fees. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Ohio.

Is a Cash Advance Legal in Ohio?

Short-term loans are legal in Ohio, but the two-week, single-payment payday loan is not. House Bill 123, effective October 29, 2018, rewrote the Short-Term Loan Act in Ohio Revised Code 1321.35 to 1321.48. Under section 1321.39 a licensed lender may lend up to $1,000, and the loan must run at least 91 days and no more than one year unless the monthly payment stays under 6 percent of your gross monthly income or 7 percent of your net income. Loans must be precomputed and repaid in substantially equal installments. Section 1321.40 limits what the lender can charge: interest of up to 28 percent a year, a monthly maintenance fee of no more than the lesser of 10 percent of the original loan amount or $30, a 2 percent origination charge on loans of $500 or more, and a $20 check collection charge if a payment bounces. Nothing else may be added. You can cancel by 5 p.m. on the third business day, you can hold only one short-term loan at a time, and your total short-term borrowing across all licensees is capped at $2,500. The Division of Financial Institutions in the Department of Commerce licenses and examines these lenders.

The governing law is Ohio Short-Term Loan Act, Ohio Revised Code 1321.35 to 1321.48, as amended by House Bill 123 (132nd General Assembly) (Ohio Rev. Code 1321.39, 1321.40, 1321.401, 1321.402, 1321.41).

Loan Limits and Terms in Ohio

The cost of an Ohio short-term loan is mostly the monthly maintenance fee, not the interest. On a $300 loan the fee is $30 a month, which is 10 percent of principal every month the loan is open, while the 28 percent interest adds a few dollars. That is why the minimum 91-day term matters: the fee is charged for three months. The law offsets this with prorated refunds. Under section 1321.402, if you pay off or refinance early the lender must refund the unused share of interest, maintenance fees and other charges based on the days the loan was actually outstanding. Active-duty service members and their dependents cannot be charged the maintenance fee at all. A lender may not take a vehicle title, real estate or any other collateral, and collection costs after default are capped at the original loan amount.

What a $300 Loan Costs in Ohio

This uses the standard 91-day minimum term in ORC 1321.39 and the maximum charges in ORC 1321.40. Interest: $300 x 28% x 91 / 365 = $20.94, calculated on the full balance for the whole term as an upper bound; installment payments reduce it slightly. Maintenance fee: the lesser of 10% of $300 or $30 is $30, charged for three months, $90. No origination charge because the loan is under $500. Total $20.94 + $90 = $110.94. APR = 110.94 / 300 x 365 / 91 = 1.48, or about 148 percent. Paying off early earns a prorated refund under ORC 1321.402.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Ohio

• A lender may charge only the items listed in ORC 1321.40: 28 percent interest, a maintenance fee of no more than the lesser of 10 percent of principal or $30 a month, a 2 percent origination charge on loans of $500 or more, one $20 check collection charge, and up to $10 to cash a proceeds check.
• You may rescind the loan by returning the amount borrowed by 5 p.m. on the third business day after you receive it, and the contract must tell you so (ORC 1321.39).
• The loan must be precomputed and repaid in substantially equal installments over at least 91 days, so a lump-sum balloon payment on your next payday is not allowed unless the payment fits the 6 percent or 7 percent income test (ORC 1321.39).
• If you pay the loan off early or refinance it, the lender must refund a prorated share of interest, maintenance fees and other charges based on the days the loan was actually open (ORC 1321.402).
• A lender may not make you a short-term loan while you have one outstanding with any licensee, and may not push your total short-term principal above $2,500; it must take your signed eligibility declaration and make a concerted effort to verify it (ORC 1321.41).
• A lender may not take a vehicle title, real property or any other collateral, and active-duty service members and their dependents cannot be charged the monthly maintenance fee (ORC 1321.40 and 1321.41).
• The contract must carry a warning that the loan costs more than typical bank credit, the annual percentage rate under the Truth in Lending Act, and the Division of Financial Institutions' contact details for complaints (ORC 1321.39).

Complaints and licence checks go to the Ohio Department of Commerce, Division of Financial Institutions: 614-728-8400, com.ohio.gov/divisions-and-programs/financial-institutions, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Ohio

Any company that makes short-term loans to Ohio residents, in a store or online, must hold a Short-Term Loan Act license from the Division of Financial Institutions and follow the same $1,000, 91-day and 28 percent plus fee limits. The Division lists short-term lenders among the non-depository companies it regulates and accepts written complaints about them. The 2018 law was written to close the older workarounds, so an Ohio license is now the test that matters. Websites based in other states or claiming tribal status still advertise two-week loans to Ohioans at fees far above what section 1321.40 allows. Those loans are outside the Act, and the Division's complaint process and the prorated refund, rescission and collateral rules will not protect you. Check the license before you give a website your bank login or debit authorization, and treat any offer of a single-payment loan due in two weeks as a sign the lender is not operating under Ohio law.

Alternatives If a Payday Loan Is Not the Right Fit

The Ohio short-term loan itself is the regulated small-dollar product, and for most borrowers the useful move is to keep the term short and repay early to trigger the prorated refund in ORC 1321.402. Beyond that, Ohio licenses lenders under the Consumer Installment Loan Act, the General Loan Law and the Small Loan Act, all supervised by the same Division, and those loans can run larger and longer with their own rate rules. Federal credit unions offer Payday Alternative Loans, and many Ohio credit unions and community banks have small emergency loan programs. Employer payroll advances and earned wage access avoid a loan altogether. For a specific bill, Ohio's HEAP and PIPP programs help with energy costs, county Job and Family Services offices handle emergency assistance, and 2-1-1 can point you to local rent and food help. A payment plan with the creditor is almost always cheaper than $30 a month in maintenance fees.

Compare the installment loan and payday alternative loan options before you decide.

Cities We Cover in Ohio

• Cincinnati, OHLocal cost of living, ordinances and help lines
• Cleveland, OHLocal cost of living, ordinances and help lines
• Youngstown, OHLocal cost of living, ordinances and help lines

Frequently Asked Questions

Nearby States

• MichiganThe fee cap, a worked example and the regulator to call in Michigan.
• IndianaThe fee cap, a worked example and the regulator to call in Indiana.
• KentuckyThe fee cap, a worked example and the regulator to call in Kentucky.
• West VirginiaThe fee cap, a worked example and the regulator to call in West Virginia.
• PennsylvaniaThe fee cap, a worked example and the regulator to call in Pennsylvania.