Ohio

Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.

In 2008, Ohio voters affirmed capping the cost of payday loans in the state at 28% interest; however, payday and car-title lenders engaged in schemes to evade the voter-mandated cap, trapping consumers in a cycle of debt with APRs of over 500%. In 2018, Ohio lawmakers approved some restrictions on these lending schemes, but even with these 2018 changes, payday lenders in Ohio are still charging over 100% APR and are not subject to requirements that ensure the loans can be repaid. Ohioans want real reform that has been proven to stop the debt trap—a rate cap of 36% or lower that includes fees...

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...

In 2008, the majority of Ohio voters affirmed capping the cost of payday loans in the state to 28% interest, inclusive of all fees and other charges. Since that time, payday and car title lenders have evaded the voter-mandated cap, engaging in schemes to charge rates reaching over 300% annual percentage rate (APR), and even higher than 500% APR. In 2018, after a decade of inaction by Ohio regulators and lawmakers, the Ohio legislature approved some restrictions on these lending schemes. Even with these 2018 changes, payday lenders in Ohio will still be able to charge upwards of 200% APR, and...

Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car-title loans, the end result is too often the repossession of the borrower’s car, a critical asset for many people...

This brief analyzes the payday and car title loan market in Ohio, where millions of dollars are drained out of low-income Ohioans' pockets and communities in the form of predatory loan fees. Key findings include: There are 836 storefronts in Ohio that make payday or car title loans, the majority of which (59%) offer both forms of high-cost loans. Payday and car title loans drain more than $502 million in predatory loan fees from Ohioans annually, twice as much as what payday loans drained in 2005. Larger, longer-term payday and car title loans with triple-digit interest rates further expose...

This color-coded map of payday stores by household reveals a disturbing pattern. Southern states are among the most targeted for these high-cost, low-dollar loans.