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Ohio now has one of the stronger sets of protections in the country — a 28% rate cap, a payment tied to your actual income, and a hard ceiling on total fees. Getting there took ten years and a political scandal, and the reason why is worth understanding before you borrow anywhere.
The Short-Term Loan Act of 2008 capped payday lending at 28% APR. Lenders simply licensed themselves under different statutes instead — the Mortgage Lending Act, and later as Credit Services Organizations acting as brokers.
An Ohio Supreme Court justice later asked, in a published opinion, how the General Assembly could set out to regulate an industry and achieve nothing at all.Ohio · Legislative historyOhio Legislative Service Commission members brief on payday lending — after the Short-Term Loan Law passed, no payday lender registered under it
The lesson travels. A rate cap only works if it covers every licence a lender could use. When you read that a state has capped payday rates, the real question is whether the cap follows the loan or only the label.
House Bill 313 let licensed check-cashing businesses make small loans up to $800, with origination fees and 5% monthly interest on unpaid principal.Ohio · Legislative historyLSC members brief — H.B. 313 authorised check-cashing loans not exceeding $800 with a maximum six-month duration
The Short-Term Loan Act capped rates at 28%. Lenders relicensed under the Mortgage Lending Act and the Credit Services Organizations Act and carried on. The cap applied to a licence nobody took out.
A coalition of consumer, community and faith organisations pushed for reform. Progress came partly through a scandal involving payday lenders that forced the House Speaker’s resignation.
House Bill 123 passed with bipartisan support and was signed on 24 July 2018. It required any non-bank lender making a loan of $1,000 or less, or repayable within a year, to hold a Short-Term Loan Law licence — closing the licence-shopping route. Effective 29 October 2018, with compliance required from 27 April 2019.
SCIL, Inc., which operates Speedy Cash storefronts, received the first-ever licence issued under the small loans section — eleven years after the legislature first tried to regulate the industry.Ohio · State announcementOhio House release — first licence issued under the Short-Term Loan Act as amended by HB 123
The first year under the new law
$143Average fee on an average loan of $393, across 216,560 loans taken by 141,264 borrowers in 2019 — the first year lenders had to comply. That is a fee equal to 36% of the amount borrowed, and it is what the reformed, capped, protected version of this product costs.Ohio · State reportingOhio Department of Commerce annual report for 2019, the first year of HB 123 compliance — 141,264 borrowers, 216,560 loans, average $393, average fee $143
Ohio ties your monthly payment to your verified income — no more than 6% of gross or 7% of net per month. Most states cap the loan; Ohio caps the payment.
If a lender is asking for more than that, the loan does not comply. Check your agreement against a payslip, and if the numbers do not work, raise it with the Division of Financial Institutions before you sign.
HB 123 requires lenders to report their activity to the Department of Commerce, which publishes an annual report. Before 2018 it was genuinely difficult to establish how large payday lending in Ohio even was.
That reporting requirement is arguably as valuable as the rate cap — you cannot regulate what nobody measures.
You can revoke authorisation and instruct your bank to stop the payment, whatever your agreement says.
What Regulation E says about automatic payments →
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A payday loan is a consumer debt. If it goes unpaid, two Ohio rules decide what a lender can do next: how long it has to sue you, and how much of your pay a court can order taken.
Being sued over an old payday loan? A collector can still file, but the time limit is a defence you can raise — and you cannot be jailed for the debt. What can and cannot happen if you don’t pay →