A payday loan may be simple to get, but make sure you know the laws first.
If you’ve fallen on hard financial times, you might be looking into a payday loan. As an Ohio resident, you should be sure to confirm that you’re being charged the right interest rate and that the terms are something you can afford.
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- Min. Loan Amount: $500
- Max. Loan Amount: $10,000
- Loan Term: 90 days to 72 months
- Turnaround Time: As early as 1 business day
- Requirements: Must have a monthly income of $1,000+ after taxes and valid checking account.
How does payday lending in Ohio work?
Payday lending is legal in Ohio under the Ohio Revised Code Ann. 1321.35 et seq., however there are no lenders officially licensed under these statutes. Instead, lenders register as small loan lenders (versus short-term lenders) in order to avoid the interest rate cap of 28%.
This means that Ohio lenders skirt the law and often charge well over 600% APR.
In order to protect yourself from predatory lending, be sure your lender is following these official regulations:
- Maximum loan amount: $500
- Loan term: 31 or more days
- APR: 28%
- Finance charge: A loan costs $1.08 per $100
- Collection fees: $20 collection charge
If you default on your loan, a lender may also charge you for court costs and possible damages.
New laws on the wayOn October 29, 2018, a new set of payday loan regulations will come into effect. A 2008 law prevented payday lenders from charging more than 28% interest, but many skirted this regulation by register under the Ohio Small Loans Act.
These changes mean that Ohio payday lenders will no longer be able to charge the nation’s highest interest rates. Loans for less than 90 days will have a payment cap of 6% of your gross monthly income or 7% of your net monthly income. For loans between 90 days to one year, fees can’t exceed 60% of the loan value, and monthly fees will be limited to either 10% of the original loan amount or $30, whichever is less.
There will also be a few other changes, including banning the use of car titles as collateral for small loans and giving borrowers a three-day window to return their loan.
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How do I apply for a payday loan?
All payday lenders will require that you be at least 18 years old, have a regular source of income and be an American citizen or permanent resident of the US.
The application will usually have questions asking for your personal information like your Social Security number, employer, income and often your bank account numbers.
What are the alternatives to payday loans?
If you’re struggling between paying your debts and paying your everyday bills, you may want to look into assistance programs like Medicaid, the Emergency Food Assistance Program (TEFAP) or the Home Energy Assistance Program (HEAP).
Although payday lending is technically legal, lenders often take advantage of loopholes to avoid abiding by the laws that limit the interest they can charge. This means you need to be careful when taking out a loan and consider a payday loan only when you’ve exhausted your other options.