Payday Loan Laws In Ohio

The consumer seeking a payday loan in Ohio has many laws that actually helps protect them from predatory lending. Also known as a short term loan or cash advance, these are personal loans that are designed to be paid off upon the borrower receiving their next paycheck. While these funds often come at a much higher interest rate due to the short nature, there are still measures in place to help the borrower from overpaying.

Capped Interest Rates

Ohio payday loans stipulate that the lender cannot charge above a specified rate of 28% for the first one-thousand dollars borrowed. Amounts over that rate are subject to lower interest. However, some loans can fall under types of lending such as the small loan act and are subject to higher interest rates. In addition to this, the lender must be upfront about the fees associated with the loan prior to the consumer agreeing to the terms.

License Requirements

Not just anyone in the state of Ohio can operate a payday loan service. State laws require that the business be licensed, thus meaning the company is investigated. The state issues a certificate to these businesses and it must be in display. If the business changes names or location, this information must be submitted prior to operation being allowed to continue. These institutions are also prevented from using names similar to lending institutions such as banks or credit unions in order to prevent the potential of confusion.

Other Important Facts

These are just a few of the Ohio payday loan laws that are applicable to the consumer. The PayDay Loan Act of 2008 requires these lenders to be incompliance with several other regulations such as not allowing the borrower to take out another loan the same day of repaying it for example. Other regulations can include but is not limited to how funds are applied to the balance, additional fees and even to the collection process.