Ohio payday loan laws cap the interest rate at 28% a year, cap the loan amount at $1,000, and require a repayment term of at least 91 days and no more than one year. That is the rule today under the Short-Term Loan Act, Ohio Revised Code Section 1321.39. If a lender in Ohio quotes you something that doesn't fit inside those numbers, you're either looking at an unlicensed operator or a lender hoping you won't check.
That 28% figure isn't new. Ohio's earlier short-term lending law also capped interest at 28% on paper. What changed is what else a lender could charge on top of it, and how much room they had to move fees outside the cap entirely. House Bill 123, the Ohio Fairness in Lending Act, closed most of that room in 2018.
Understanding where the old system failed is the fastest way to understand what protects you now. Ohio's regulator, the Ohio Division of Financial Institutions, licenses and examines every short-term lender operating in the state, the same way a state banking department oversees banks. That agency is who you contact if a lender charges you something the statute doesn't allow.
The Loophole HB 123 Closed
Before HB 123, Ohio's 28% cap only covered interest. It said nothing about fees charged by a separate company arranging the loan. Lenders exploited that gap two ways: some held licenses under the Ohio Mortgage Loan Act, a statute never built for short-term consumer lending, while others registered as Credit Services Organizations, a category built for credit repair and debt brokering.
Either route let a lender charge an uncapped broker or arrangement fee to connect a borrower with a third-party lender, fees the 28% cap never reached. WOSU Public Media reports that APRs under this structure could reach 600% or higher, even though the underlying loan technically respected the 28% cap.
House Bill 123 targeted that exact mechanism. It was signed into law in 2018, with provisions phasing in and full compliance required by April 2019, according to WOSU's reporting on the rollout. The fix was structural: every fee a short-term lender charges now has to be folded into the loan's APR calculation instead of sitting outside it.
The Current Rules Under Ohio's Short-Term Loan Act
HB 123 rewrote the Short-Term Loan Act's terms from the ground up, well past the CSO loophole itself, and every limit below is current law under Ohio Revised Code Section 1321.39 and 1321.40. Read it as a checklist: a storefront or online lender licensed in Ohio has to fit inside every one of these numbers, and none of them change based on how you applied.
Loan size and term
The maximum loan under the Short-Term Loan Act is $1,000. The term has to run at least 91 days and no more than one year, a deliberate move away from the old single-payment structure due on your next payday. A shorter term is allowed only if the total monthly payment stays under 6% of your gross monthly income or 7% of your net monthly income, whichever is greater.
That 91-day floor is itself part of the reform. The pre-2018 structure had no 91-day floor, just a single payment due whenever your next paycheck landed, the same setup that pushed borrowers toward the rollover trap the current law now bans outright.
What a lender can charge
Interest is capped at 28% a year. On top of that, a lender can add a monthly maintenance fee equal to the lesser of 10% of the original loan amount or $30 a month, plus a one-time origination charge of 2% of the loan amount on loans of $500 or more (ORC 1321.40). The origination charge doesn't get added to the balance that accrues interest, and you're billed for it just once, when you take out the loan.
Combined, every fee and charge over the life of the loan is capped at 60% of the original principal, a ceiling that exists specifically so fees can't quietly stack past what the interest cap was meant to limit.
Licensing and no rollovers
A lender has to hold a license specifically under the Short-Term Loan Act, issued by the Ohio Division of Financial Institutions inside the Ohio Department of Commerce. A general lending license doesn't cover it. Ohio law also doesn't allow rollovers, so a balance never rolls into a new loan carrying a new fee; you repay it on a scheduled installment plan built into the original loan.
Why the installment structure matters
The old payday model had you repay everything, principal, interest, and fees, in a single payment on your next payday. If you couldn't cover it, the common move was a rollover: pay a new fee to push the due date out to your following payday, then do it again. Ohio's ban on rollovers, paired with the required installment structure, spreads repayment across the full term, so a single missed payday doesn't automatically trigger a new fee stacked on top of what you already owe.
What a Loan Actually Costs Today
The rate cap tells you the ceiling on interest. It does not tell you what you will actually owe once the maintenance fee and origination charge are added, so here is the math on two real loan sizes, using the same all-fees-in-the-APR method our guide on how APR is calculated on a fee-based loan walks through.
APR stands for annual percentage rate, the standardized way lenders are required to express a loan's total cost as a yearly figure. It folds fees in alongside interest, which is exactly why HB 123 made folding every fee into the APR calculation the center of its fix.
When you compare loan offers yourself, ask for the total dollar cost over the full term, not just the advertised rate, since the 28% headline number alone never captures what you'll actually pay.
A $500 loan for 91 days
Interest: $500 x 0.28 x (91/365) = $34.90. Monthly maintenance fee: the lesser of $50 (10% of $500) or $30 a month, so $30 x 3 months (91 days runs roughly three months) equals $90.00. Origination charge: 2% of $500 = $10.00, since the loan meets the $500 threshold.
Add those together and you get $134.90 in total fees and interest to borrow $500 for 91 days. Ohio's 60% total-cost cap would kick in at $300 on a loan this size, so $134.90 lands well under it and is not reduced further. Annualized, that $134.90 works out to roughly 108% APR, well above the headline 28% interest figure because the fees stack on top of it, though nowhere near the 600%-plus rates the old Credit Services Organization loophole allowed. That figure assumes you repay on schedule with no missed or late payments.
A $1,000 loan for one year
Interest: $1,000 x 0.28 x 1 year = $280.00. Monthly maintenance fee: $30 a month x 12 months = $360.00. Origination charge: 2% of $1,000 = $20.00. Add those together and the uncapped total comes to $660.00.
That's where the 60% cap actually does something. Sixty percent of a $1,000 principal is $600, and $660 exceeds it, so the law caps the total fees and charges at $600. On the largest loan the statute allows, held for the longest term the statute allows, you pay no more than $600 in fees and interest, an effective annualized cost of 60%. Pay the loan off before the full year and the interest portion shrinks accordingly, since it accrues against time outstanding rather than against the full term automatically.
Did Lenders Find New Workarounds?
The honest answer is partial. Ohio's Credit Services Organization Act was amended alongside HB 123 so CSOs can no longer broker credit under $5,000, under one year, or over 28% APR, which closes the specific small-dollar, high-APR loophole those brokers used to exploit.
The CSO channel itself didn't disappear, though it shrank hard. In WOSU Public Media's 2019 reporting on the rollout, licensed short-term lenders in Ohio had fallen from 161 to 30, a decline of more than 80%, and licensed CSOs from 51 to 24. That 51-to-24 figure counts licenses, not storefronts: WOSU put the actual drop in CSO storefront locations at roughly 700 statewide, since many CSOs operated more than one outlet under a single license.
That 2019 snapshot is the most recent verified count available, and the roster may look different today. For a borrower comparing offers, the legal change matters more than the raw headcount: a licensed CSO today can't do what a licensed CSO could do in 2017, whatever the current number of licensees turns out to be.
Texas takes a different approach. Storefront lenders there can still route loans through Credit Access Businesses to add a broker fee outside the state's rate cap, the same structure Ohio's CSO loophole used before HB 123. If you want to see what that looks like in a state that hasn't closed it, our guide on Texas payday loan laws and the Credit Access Business loophole breaks down the mechanics.
What to Do If You Cannot Repay
Because Ohio requires installment repayment instead of a single balloon payment, a loan that gets away from you looks different than the old rollover trap. There's no single due date and no choice between paying in full or paying a new fee to push it back. You fall behind on a scheduled payment plan, which is its own problem, but a more structured one to work through.
Missing a scheduled installment still carries consequences, the same as falling behind on any other installment loan. Treat the payment schedule with the same seriousness you'd give a car loan or a credit card; the flexible feel a balloon-payment payday loan sometimes had doesn't carry over to this structure.
If you're already behind and need a step-by-step plan, our guide on how to break the payday loan rollover cycle walks through extended payment plan requests, ACH revocation, and refinancing through a credit union PAL loan, worth comparing before you take out another loan under this Act.
Verifying a Lender or Filing a Complaint
Every short-term lender operating in Ohio has to be licensed under the Short-Term Loan Act by the Ohio Division of Financial Institutions, part of the Ohio Department of Commerce. Before you borrow, you can confirm a lender's license status directly with the Division. The Division also handles complaints if a lender has already charged you something outside these limits, whether that's interest above 28%, fees that push past the 60% total-cost cap, or a rollover the law doesn't allow.
Before you sign anything, ask the lender for its license number and confirm it independently through the Division instead of taking the lender's word for it. A legitimate short-term lender won't hesitate to provide it, since the license is public information the Division already maintains.
You have a second option too. The Consumer Financial Protection Bureau takes payday lending complaints regardless of which state you borrowed in. Our guide on how to file a CFPB complaint against a payday lender covers the narrative structure and timing that make a complaint more likely to get a real response.
Frequently Asked Questions
Is payday lending legal in Ohio?
Yes. Ohio allows short-term lending under the Short-Term Loan Act, but only within strict limits: a 28% annual interest cap, a $1,000 maximum loan, and a term of at least 91 days. Lenders must be licensed by the Ohio Division of Financial Institutions (ORC 1321.39).
What is the maximum interest rate on a payday loan in Ohio?
Interest is capped at 28% a year under Ohio Revised Code Section 1321.39. On top of that, a lender can add a monthly maintenance fee (the lesser of 10% of the loan or $30) and a 2% origination charge, but all fees combined can't exceed 60% of the principal (ORC 1321.40).
How much can I borrow under Ohio's Short-Term Loan Act?
The maximum loan amount is $1,000. The repayment term has to run at least 91 days and no more than one year, unless your monthly payment stays under 6% of gross income or 7% of net income, in which case a shorter term is allowed under ORC 1321.39.
Can a lender roll over my Ohio short-term loan?
No. Ohio law doesn't permit rollovers on short-term loans. You repay under a scheduled installment structure built into the original loan agreement instead, a deliberate change from the old single-payment payday model that used rollovers to add repeated fees.
Did closing the CSO loophole get rid of Credit Services Organizations in Ohio?
It narrowed what they can do instead of shutting them down. WOSU Public Media reported in 2019 that CSOs dropped from 51 to 24 after HB 123. Separately, the amended CSO Act now bars them from brokering credit under $5,000, under one year, or over 28% APR.
Where do I file a complaint against an Ohio short-term lender?
Start with the Ohio Division of Financial Institutions, which licenses short-term lenders and handles consumer complaints. You can also file with the Consumer Financial Protection Bureau; our guide on filing a CFPB complaint against a payday lender covers what to include.
