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 still will not be subject to requirements that ensure the loans can be repaid without reborrowing or defaulting on other expenses. This policy brief provides a summary of Ohio’s payday loan laws following the changes enacted in 2018 and highlights remaining consumer concerns.

There are four statutes that govern various types of small dollar consumer lending in Ohio: the Short Term Loan Act, the Small Dollar Loan Act, the Second Mortgage Loan Act, and the Consumer Installment Loan Act. The Ohio Credit Services Organization (CSO) Act has also been exploited by payday lenders and car title lenders to engage in brokering schemes to make loans outside of the voter-affirmed rate cap.

This brief focuses primarily on the changes to the Ohio Short Term Loan Act and the CSO Act but also highlights some of the other types of lending still permitted under the other statutory regimes.