Personal Loans in Ohio: What Licensed Lenders May Charge

Which Ohio law covers your loan

Chapter 1321 holds four separate lending laws, and a lender may be licensed under more than one. The loan's size and term decide which ones are possible. A $2,000 loan repaid over two years is too large and too long for the Short-Term Loan Act, so it is made under one of the other three.

The Short-Term Loan Act limits were rewritten by House Bill 123, effective October 29, 2018: a short-term loan may not exceed $1,000 and must run no more than one year and at least 91 days. A shorter term is allowed only if the monthly payment stays within a set share of your verified income. Our sister site Lendmira covers those loans on its Ohio lending laws page.

What the Consumer Installment Loan Act allows

Section 1321.68 lets a licensee charge interest of up to 25% a year on the unpaid principal, computed by the actuarial method. On top of interest, it allows an origination charge that steps up with the loan size, paid at closing or added to the principal.

A licensee may also charge up to $25 for a credit report it obtains for your loan. Because these charges count in the finance charge, compare offers on the APR shown on your Truth in Lending disclosure, not on the interest rate.

Late fees, prepayment and credit insurance

• Late fee: one default charge per installment not paid in full within ten days of its due date, up to the greater of 5% of the installment or $15 (1321.68(K)).
• Returned payment: up to $20, plus any amount another bank passes on (1321.68(J)).
• Prepayment: if you pay a precomputed loan in full a month or more before the last due date, the lender must refund or credit the charges for the unexpired periods.
• Credit insurance: credit life, accident and health, and unemployment premiums may not exceed the rate filed with the superintendent of insurance, and you may cancel within 25 days after the loan is made for a full refund (1321.68(E)).

Read credit insurance and add-ons before you agree to any coverage; the 25-day window is your chance to undo it.

Licensing and how Ohio compares

Under section 1321.63, no one may engage in the business of lending under the Consumer Installment Loan Act, or charge more than a lender without a license could, without first getting a license from the superintendent of financial institutions. The rule also covers anyone who uses a device, subterfuge or pretense to exceed the limits, or who arranges such a loan for a fee. Banks and credit unions answer to separate charters and regulators, and a bank may charge the rates its home state allows; lenders that partner with a bank may lend outside these limits, so ask who the lender of record is.

On the National Consumer Law Center's comparison of a $2,000 two-year loan, Ohio's figure sits between Pennsylvania at about 24% and Michigan at about 30% on one side, and Indiana at about 40% and Kentucky at about 42% on the other. The state rules map shows every state side by side.

Check a lender and file a complaint

1. 1 Look up the license on NMLS Consumer Access at https://www.nmlsconsumeraccess.org/, which the Division of Financial Institutions points to for non-depository lenders, or through the Department of Commerce license lookup.
2. 2 Ask which law the loan is made under: the agreement should say whether it is a Consumer Installment Loan Act, Small Loan Act or general loan law loan, which tells you the limits.
3. 3 File a complaint with the Division of Financial Institutions online at https://com.ohio.gov/wps/portal/gov/com/divisions-and-programs/financial-institutions/file-a-complaint-fi.
4. 4 Send a complaint to the CFPB as well if the lender is a bank or a bank partner. Our guide on how to verify a lender lists the warning signs.

Questions people ask