Payday Loan Laws in Ohio: Legal, Banned, or Capped?

Payday lending is legal but tightly capped in Ohio. Under Ohio's Short-Term Loan Act, as overhauled by the 2018 Fairness in Lending Act (House Bill 123), a licensed short-term lender may charge no more than 28% annual interest on the loan, plus a monthly maintenance fee that cannot exceed the lesser of 10% of the principal or $30. Loans are limited to $1,000 and a maximum term of 12 months, and crucially, the total of all interest, fees, and charges may not exceed 60% of the original loan amount. Ohio law also effectively prohibits the classic "rollover" by requiring loans to be repaid in substantially equal installments rather than as a single balloon payment due on payday.

This is a dramatic change from how payday loans once worked in Ohio. For roughly a decade, lenders sidestepped a 2008 voter-approved 28% cap by licensing under other statutes, and the typical Ohio payday loan carried an effective APR of nearly 600%. HB 123 closed those loopholes and forced all short-term lending into a single, regulated framework with hard ceilings on cost.

Is payday lending legal in Ohio?

Yes. Unlike states that ban payday lending outright or set rate caps so low that lenders simply leave, Ohio permits short-term lending through licensed companies under the Short-Term Loan Act. The difference is that Ohio's rules make the loans far less profitable and far less dangerous than the old triple-digit-APR products. A lender must hold a Short-Term Loan license issued by the Ohio Department of Commerce, Division of Financial Institutions, and must comply with every cost and structural limit in the statute.

How the Ohio cost limits work

Ohio does not rely on a single APR number. Instead, the Fairness in Lending Act layers several independent caps that all must be satisfied at once:

• Interest rate: No more than 28% per year on the unpaid principal balance.
• Monthly maintenance fee: The lesser of 10% of the original principal or $30 per month. This fee is not allowed at all if the loan principal is $500 or less and the borrower is in good standing in some circumstances, so always read the disclosure.
• Loan amount: Maximum of $1,000.
• Loan term: Up to 12 months, with the loan repayable in roughly equal installments.
• Total cost ceiling: The combined interest, fees, and charges over the life of the loan cannot exceed 60% of the original principal.
• Check-collection charge: A single charge (commonly $20) is allowed for a returned or dishonored payment.

Because of the 60% total-cost ceiling, even a small, short loan in Ohio costs a fraction of what borrowers paid before reform. The law also gives borrowers a right to rescind the loan, generally by the end of the third business day, and bars prepayment penalties so a borrower who repays early stops accruing interest.

Rollovers, renewals, and back-to-back loans

The old payday model trapped borrowers in a cycle of fee-only "rollovers" where the principal never shrank. Ohio's installment structure undercuts that model: the loan must amortize over its term, and there is no single-payment balloon to roll. The statute also restricts lenders from issuing new short-term loans that would push a borrower over the cost and outstanding-balance limits, which limits the practice of stacking loans on top of one another. If a lender pressures you to "refinance" or take a new loan to cover an old one in a way that recreates the rollover trap, that is a red flag worth reporting.

How Ohio compares to the federal baseline

Several federal rules sit underneath Ohio's law. The Military Lending Act caps the all-in "Military APR" at 36% for active-duty servicemembers and their dependents, which can be stricter than a state limit in some cases. The federal Truth in Lending Act requires lenders to disclose the finance charge and APR before you sign, so you can compare offers. If a payday debt goes to collections, the federal Fair Debt Collection Practices Act (FDCPA) bars third-party collectors from harassment, false threats, and calling at unreasonable hours, and the Fair Credit Reporting Act (FCRA) governs how the debt may be reported. Ohio cannot legally authorize criminal prosecution simply for failing to repay a payday loan; a bounced-check or fraud claim is a separate matter with its own proof requirements.

Enforcing your rights

If a lender charges more than Ohio allows, operates without a Short-Term Loan license, or ignores the cost ceilings, the loan terms may be unenforceable and you may be entitled to relief. Practical steps:

• Keep every document. Save the loan agreement, the Truth in Lending disclosure, payment records, and any texts, emails, or call logs.
• Verify the license. Confirm the company holds a current Short-Term Loan license with the Ohio Department of Commerce, Division of Financial Institutions. An unlicensed lender is a serious problem.
• Do the math. Add up all interest and fees and compare against the 60%-of-principal ceiling and the 28% rate cap. Overcharges are a violation.
• File a complaint. Submit a complaint to the Ohio Attorney General's Consumer Protection Section, which investigates unfair and deceptive lending and collection practices, and to the Division of Financial Institutions, which oversees licensing.
• Get legal help. Legal Aid offices across Ohio assist lower-income borrowers, and a consumer attorney can advise whether you have a claim for damages.

Where to verify Ohio's current rules

Statutory dollar figures and fee caps can be adjusted, and individual loan offers vary, so confirm the current numbers before relying on them. The authoritative sources are the Ohio Revised Code (the Short-Term Loan Act provisions), the Ohio Department of Commerce, Division of Financial Institutions for licensing and supervision, and the Ohio Attorney General's Consumer Protection Section for complaints and consumer guidance. As of 2026 the core structure above, 28% interest, a capped monthly maintenance fee, a $1,000 loan limit, a 12-month maximum term, and a 60% total-cost ceiling, reflects the Fairness in Lending Act framework, but you should confirm the exact figures with the official state source before signing or disputing a loan.

Bottom line: payday loans are not banned in Ohio, but they are no longer the 600%-APR debt traps they once were. The state allows them only under strict caps designed to keep the total cost low and the repayment schedule manageable.

Official Ohio Sources

This page is based on Ohio law. Limits and deadlines change — verify the current details directly with the official Ohio sources below. This is general legal information, not legal advice.

• Ohio Attorney General — Consumer Protection Section — official Ohio agency.
• File a Consumer Complaint — Ohio Attorney General
• Ohio Revised Code Chapter 1345 — Consumer Sales Practices Act

Federal law also applies. Federal laws like the Fair Debt Collection Practices Act and Fair Credit Reporting Act protect you nationwide, on top of Ohio’s own rules.