Ohio Payday Loan Laws: The Ultimate Legislative Guide

Somehow, payday loans are still somewhat divisive in our country. Attitudes toward the industry vary significantly between states. While some feel strongly that the practice is immoral and abusive, others feel that lenders should be able to charge rates as they see fit. The federal government has little control over the matter, and each state has taken its right to regulate loans and run with it, though each in different directions. The Ohio payday loan laws, in particular, have gone through many ups and downs over the years. Here’s where they currently stand as of 2021.

Payday lending status in Ohio: Legal (limited)

Payday lending is currently legal in Ohio, but lenders are highly restricted in what they can do. In years past, attempts to regulate the industry have failed, but no longer. As of 2018, payday loans in Ohio have affordable interest rate caps and clear limits on their principal balances, rollovers, and repayment terms.

READ MORE: States where payday loans are illegal

Loan terms, debt limits, and collection limits in Ohio

• Maximum loan amount: $1,000
• Interest rate (APR): 28% 
• Minimum loan term: 91 days 
• Maximum loan term: One year 
• Number of rollovers allowed: None
• Number of outstanding loans allowed per lender: One
• Cooling-off period: N/A
• Finance charges: The lesser of 10% of the amount financed or $30
• Collection fees: $20 limit
• Criminal action: Prohibited

Payday lending is legal in the state, but the Ohio payday loan laws greatly limit the industry. The loan rate caps are particularly beneficial for consumers and are even lower than some states who have banned payday lending (they usually use 36%). Take a look at the official state website for the original legislation.

READ MORE: Ohio debt relief and resources

Ohio payday loan laws: How they stack up

The fight against payday lending is ongoing, and each state is its own battleground. Because state governments have the right to regulate lending independently, progress is a lot further along in some parts of the country than in others. As it stands, 16 states have disallowed payday lending.

Among the remaining 36 states where payday lending is still legal, the rules and limitations vary significantly. Some allow payday lenders to run rampant. Texas, for example, allows payday lenders to charge about as much as anyone is willing to pay. Others, like Ohio, have much more stringent restrictions. 

The Ohio payday loan laws are fairly complex, even amongst the states that have regulations to limit lenders in place. It took them years to finally pass legislation that effectively restricted payday lenders. In the past, several attempts failed to make any meaningful difference.

Payday lenders found loopholes that allowed them to continue with business as usual, despite the state government’s attempt to crack down on them. Before the most recent legislation went into effect, a typical payday loan in Ohio cost 591% APR.

READ MORE: How to get out of a payday loan nightmare

Maximum loan amount in Ohio

The Ohio payday loan laws limit principal balances on short-term loans to $1,000. There are no extenuating circumstances or exceptions that allow payday lenders to get around the rule. In practice, most payday lenders in Ohio offer loans everywhere between $100 and $1,000, usually in increments of $10.

In addition to the $1,000 limit per loan, borrowers may only have $2,500 in total payday loans, even if the balances are with multiple lenders. Payday loan providers must meaningfully seek to verify that applicants do not have too much debt elsewhere before providing a loan.

READ MORE: Payday loan consolidation and relief program that works

Rates, fees, and other charge limits in Ohio

The interest limit of 28% APR isn’t the only rule that Ohio payday lenders have to abide by when it comes to their charges. They also have to obey the following rules:

• The total cost of the loan (interest and fees included) must not exceed 60% of the original principal.
• Monthly maintenance fees (finance charges) must not exceed 10% of the loan principal balance or $30. This fee must be $0 if the borrower is active military. 
• If a lender sends the proceeds of a loan via check, the fee to cash it must not exceed $10.
• For loans with initial principal balances of $500 or more, an origination charge must not exceed 2% of the balance. Lenders also may not add it to the loan balance or charge interest on it.
• There can only be one collection fee per loan that must not exceed $20.

These additional charges are not a part of the 28% interest rate limit.

Maximum term for a payday loan in Ohio

The Ohio payday loan laws limit payday loan terms to 91 days in most circumstances, but there is an exception: If the loan amount is less than 6% of the borrower’s gross income OR 7% of their net income, the loan may be for less than 91 days.

How many payday loans can you have in Ohio?

There’s no limit to the number of payday loans an Ohio resident can have at one time, but they are only allowed to have one loan per lender. Though payday lenders don’t report loans to the three major credit bureaus, they do have their own reporting system, so if you already have a couple of outstanding payday loans — or have defaulted on a previous payday loan — the new lender will typically be aware.

There’s also no overall limit to the number of payday loans you can have, so once you pay off your original loan, you’re immediately eligible for a new loan. However, this isn’t recommended.

READ MORE: Can you have multiple payday loans?

Are tribal loans legal in Ohio?

Native American tribes are sovereign nations in the United States. That means they’re generally immune to state regulations and it’s hard to sue them for breaching the laws of the states they reside in, though they usually follow applicable federal laws.

Tribal lenders are a type of short-term loan provider that partners with Native tribes to try and share in their tribal immunity. They use that as an excuse to sidestep the regulations meant to protect consumers, such as the rate restrictions on payday loans.

Tribal lenders are technically legal in Ohio. There are no prohibitions on offering lending services out of a Native American reservation.

Unfortunately, tribal lenders still have a presence in the state. It’s even harder to eliminate them than traditional payday lenders since it takes a much more drawn-out legal process for authorities to impose sanctions on them.

READ MORE: How to get out of high-interest tribal loans

Consumer information

The entity responsible for enforcing Ohio payday loan laws is the state’s Department of Commerce, Division of Financial Institutions (DFI). They regulate Ohio’s non-depository consumer lenders and related consumer finance businesses. They’re also responsible for investigating any complaints that consumers make, so they’re the best resource for Ohio residents who have issues with a consumer lender like a payday lender.

The Ohio DFI allows consumers to look up lender’s licenses, so it’s a good idea to research a company’s standing there before working with them.

READ MORE: Is my payday loan lender licensed?

Where to make a complaint

The Ohio DFI is also the best place to register a complaint about illegal lending activities within the state. Here’s the contact information: 

• Regulator: Ohio Department of Commerce – Division of Financial Institutions
• Address: 77 South High Street, 21st Floor Columbus, OH 43215
• Phone: 614-728-8400
• Fax: 614-728-0380
• Email: [email protected]
• Link to website

Consumers can also submit a complaint to the Consumer Federal Protection Bureau (CFPB). They are the federal government’s organization dedicated to helping consumers with financial issues, including payday lenders.

Number of Ohio Consumer Complaints by Issue

The following statistics are from the CFPB Consumer Complaint Database.

Complaint reason	Count
Charged fees or interest you didn’t expect	279
Struggling to pay your loan	172
Can’t contact lender or servicer	88
Received a loan you didn’t apply for	55
Can’t stop charges/withdrawals from your bank account	46
Problem with the payoff process at the end of the loan	44
Problem when making payments	40
Loan payment wasn’t credited to your account	40
Getting the loan	35
Incorrect information on your report	25
Money was taken from your bank account on the wrong day or for the wrong amount	23
Applied for loan/did not receive money	12
Vehicle was repossessed or sold the vehicle	12
Problem with additional add-on products or services	10
Was approved for a loan, but didn’t receive the money	7
Credit monitoring or identity theft protection services	2
Vehicle was damaged or destroyed the vehicle	2
Unable to get your credit report or credit score	1
Problem with a credit reporting company’s investigation into an existing problem	1
Improper use of your report	1

The most complained about payday lender in Ohio: Community Choice Financial, Inc.

Though payday lenders have been complaining for decades that they wouldn’t be able to survive without charging the triple-digit interest rates, that hasn’t proven true in Ohio. The industry is still present in the state, despite having to charge so much less than they were.

In many ways, they’re still up to their usual tricks, and consumers are still having many of the same problems with them. Ohio’s citizens are still making complaints about payday lenders for charging unexpected interest, an inability to contact the lender, and payment difficulties.

The biggest offender in the state is Community Choice Financial, Inc. They’re just an umbrella corporation, though, with over a dozen subsidiaries located across the country. A quick Google search will reveal whether a company in question is a subsidiary of theirs.

The most prevalent manifestation of the corporation in Ohio is CheckSmart, which has storefront locations throughout the state. Cash Central (Community Choice Financial’s online lending division) does not offer loans in Ohio.

Most common complaints about Community Choice Financial, Inc.

Complaint reason	Count
Charged fees or interest you didn’t expect	15
Struggling to pay your loan	14
Payment to account not credited	5
Can’t stop charges/withdrawals from your bank account	8
Can’t contact lender	6
Money was taken from your bank account on the wrong day or for the wrong amount	4
Received a loan you didn’t apply for	4
Loan payment wasn’t credited to your account	2
Applied for loan/ did not receive money	2
Incorrect information on your report	1
Problem when making payments	1
Problem with the payoff process at the end of the loan	1

The most common complaint consumers make about Community Choice Financial is that they charge unexpected fees or interest. In a close second place is that consumers are struggling to repay their loans.

The truth is that these problems go hand in hand so frequently that they’re virtually the same issue. As has been the case with payday lenders since the beginning of time, many consumers simply don’t comprehend how expensive the loan products are.

While borrowers have a responsibility to know what they’re signing up for, lenders also have a duty not to deceive them. Unfortunately, payday lenders market themselves consistently as a saving grace for people who struggle financially. Consumers receive the message, see the opportunity to get some cash, and simply don’t process when payday lenders slip in their APR.

Top 10 most complained about payday lenders

Payday lender	No. of complaints since 2013	Primary complaint reason
COMMUNITY CHOICE FINANCIAL, INC.	62	Struggling to pay your loan
ENOVA INTERNATIONAL, INC.	60	Charged fees or interest I didn’t expect
CNG FINANCIAL CORPORATION	56	Can’t contact lender/ Struggling to pay your loan
Populus Financial Group, Inc.	48	Can’t contact lender
Advance America, Cash Advance Centers, Inc.	39	Struggling to pay your loan
Risecredit, LLC	36	Charged fees or interest you didn’t expect
Big Picture Loans, LLC	33	Charged fees or interest you didn’t expect
ONEMAIN FINANCIAL HOLDINGS, LLC.	29	Struggling to pay your loan/ Charged fees or interest you didn’t expect
Select Management Resources, LLC	26	Struggling to pay your loan
CURO Intermediate Holdings	24	Struggling to pay your loan

Community Choice Financial isn’t the only payday lender still causing problems in Ohio. These are the top ten offenders in the state dating back to 2013, many of whom are still doing business in Ohio despite the limitations now on payday lenders.

The most complained about tribal lender in Ohio: Big Picture Loans, LLC

The payday loan industry has been finding creative ways to get around the law for decades. The loans are still legal in Ohio, but the restrictions protecting consumers from the most dangerous practices are considerable.

Their latest tactic is to partner with Native American tribes and operate exclusively online. Both of these serve to distance them somewhat from state laws (while simultaneously giving them access to the entire country), but the tribal partnership is the real trick.

Businesses that are an extension of a Native American tribe get to take advantage of their “tribal sovereignty.” Essentially, they only have to operate under the laws and regulations of the tribe, not the state or federal governments. Even if they break those laws, consumers can’t sue them.

Big Picture Loans, LLC is one of these tribal lenders. They’re an extension of Tribal Economic Development Holdings, LLC. As a wholly-owned and operated economic arm and instrumentality of the Lac Vieux Desert Band of Lake Superior Chippewa Indians, they have an excuse to ignore all of the Ohio payday loan laws.

Here’s what their terms look like:

• Principal balances of $400 to $3,500
• Annual Percentage Rates (APRs) of 35% to 699% (the minimum rate for new customer rates is 350%)
• Repayment terms of 4 to 18 months

They have no storefronts in Ohio but offer loans entirely from their website. They call their loans installment loans, but they’re essentially the same old thing. As you can see, they have the same outrageous APRs, just a slightly longer time to repay (which only lets them offer bigger loans and charge more).

Most common complaints about Big Picture Loans, LLC:

Complaint reason	Count
Charged fees or interest you didn’t expect	25
Can’t contact lender	2
Struggling to pay your loan	2
Can’t stop charges to bank account	2
Problem with the payoff process at the end of the loan	1
Problem when making payments	1

Payday loan statistics in Ohio

• Ohio ranks as the 4th state for the most overall payday loan complaints
• Ohio ranks as the 6th state for the most payday loans per capita
• There have been 18,281 payday loan-related complaints made to the CFPB since 2013―895 of these complaints originated from Ohio
• The estimated total population in Ohio is 11,689,100 people
• There are 7.6567 payday loan complaints per 100,000 people in Ohio
• The second-most popular reason for submitting a payday loan complaint is “Struggling to pay your loan.”

READ MORE: Payday loan debt statistics

Historical timeline of payday loans in Ohio

Ohio payday loan laws have gone through a lot of changes over the years. The loans themselves have taken different forms and different names through various stages of American history, too. Here’s a recap of the highlights:

• The early 1990s: Payday loans are becoming legal across the country, but Ohio has an 8% usury rate cap that prevents the practice from taking hold in the state.
• 1995: The Payday Loan Act passes and allows short-term lenders an exemption from the usury limit. They can now charge APRs well into the triple digits.
• 1997: The industry is exploding in Ohio. Even national banks begin to put out products that are payday loans in all but name.
• 2000: Criminal action against consumers for failing to pay becomes illegal.
• 2008: The Short-Term Loan Act passes. It imposes a 28% rate cap and a $500 limit on payday loans. Lenders sidestep these rules by registering as mortgage lenders or credit service organizations. Payday loans continue to flourish in Ohio, with the highest rates in the country. 
• 2018: The Fairness in Lending Act passes. It forces payday lenders to register as short-term lenders and abide by those rules (with some tweaks). Payday loans remain legal.

Payday loans are legal in Ohio, but they don’t have nearly the power they once did. Many payday lenders closed up their storefronts when the Fairness in Lending Act passed. Just as many online lenders no longer provide loans to Ohio.

They still have a presence in the state, though. While the balance of power between lenders and consumers is much more equitable now, payday lenders continue to cause problems. With the transcendence of some into tribal lenders, it’s even more difficult to regulate them.

Flashback: An Ohio payday loan law story

Payday loans have proven to be a surprisingly difficult pest to stamp out. Some states seem to have eradicated the problem for a few years, only to discover that they have a new infestation that’s resistant to their previous tactics.

It’s apparent now that it’s going to be next to impossible to keep payday lenders down permanently. Legislation can keep them in check for a while (sometimes), but they can almost always return as new technologies and new loan products enter the market. They’re like a network of rats under a city: Block one tunnel and they’ll find a way to get around using a new one eventually. 

It’s a particularly challenging task because payday lenders’ tactics often include a willingness to bend the rules. It’s the classic hero’s dilemma: How do you stop someone willing to go further than you are to win?

One great example of this problem is a story from Ohio. The state has long been one of payday lenders’ key territories, and they did not want to give it up without a fight when 

In 2008, Ohio passed the Short-Term Loan Act. It was a fine attempt to cut back on payday lending and included the rate limit of 28% that we see today. Payday lenders panicked, of course. They were much happier charging loans with interest rates closer to ten times that amount.

Before they realized that they could simply bypass the laws by registering as a mortgage broker or credit service organization, they tried to overturn the law. That would be perfectly legal, except for the way to get signatures for their petition.

The director of a homeless shelter caught them paying illiterate homeless people to sign their petition. It would be almost amusing if it weren’t so repugnant.

The bottom line: Should you take out a payday loan in Ohio?

The Ohio payday loan laws have eliminated most of the worst payday lending practices in the state, but that doesn’t mean that the loans are suddenly an ideal form of borrowing. Even a 28% APR is expensive, and you can probably do better with another lender, especially if you have decent credit.

Besides, even though payday lenders can’t charge what they did previously, they still bill customers the absolute highest amounts that they can under the law. There’s a good reason that so many borrowers complain that they are paying unexpectedly high levels of fees and interest in Ohio.

Even worse than the traditional payday lenders in Ohio are the tribal lenders. Their loan rates are well above what state law permits, and they can ignore legislation with impunity. Stay away from them at all costs.

Instead, try a cash advance app like Dave, that will loan you a small amount of money until your next paycheck. These apps don’t charge interest but instead sometimes charge a small monthly fee.

If you’re an Ohio resident who needs help eliminating payday loan debt, DebtHammer can get you on the right path. Contact us today to request a free quote and we’ll help you start turning your financial life around!