Many states in the United States have laws that protect American debtors from predatory lending practices. Ohio is one of the states that has handed down regulations on its payday loans. The following provides an overview of the payday loan regulations in the state of Ohio.
Ohio was once a payday lender-friendly state. As of 2008, it changed its rules to prevent the abusive practices of rolling over payday advances and charging astronomical rates for missed payments. Under Ohio’s new Short-Term Loan Act, lenders must give borrowers the option to extend their loans up to 60 days, and they cannot charge the consumers any additional fees for such.
Ohio also places a cap on the amount of money a payday lender can offer consumers. Lenders may not issue payday advances that are more than $500. Additionally, they cannot charge more than 28 percent interest on any payday loan. Many payday lenders charge high interest rates of more than 300 percent. Such is not allowed in Ohio.
A wealth of consumers previously became trapped in a vicious cycle of overwhelming debt. Such occurred partially because of the limited time they had to repay the loans. Most payday advances were payable within 14 days from the date of the loan.
Under the new laws, lenders must give borrowers at least 31 days to repay a payday advance. Furthermore, borrowers who miss a payment or have a check bounce only have to pay a $20 non-sufficient funds charge for such.
The state of Ohio requires payday lenders to obtain licensing to offer the loans. They must also be stationed in the state of Ohio to offer payday advances to Ohio borrowers. This ensures that lenders play fair when it comes to issuing money to Ohio debtors.
A payday lender in Ohio must create a written agreement to issue a payday loan. Such an agreement must be written in a comprehendible format that outlines important information in a way that the consumer can understand. The lender must state in the agreement that its interest rates are higher than those of other loan-issuing parties are. Lenders must also state the appropriate fees, charges, due dates and other crucial information. Furthermore, loan contracts must inform the borrowers that they have the right to file a complaint about the loan to the Commerce Division. Ohio lenders are trying to get around the laws, but the state makes it difficult for them to do such.