Is payday lending legal in Ohio? Yes, but not in the form most people picture. Ohio's 2018 Fairness in Lending Act (House Bill 123) ended the two-week loan repaid in one lump sum from your next paycheck. What remains is a small installment loan of up to $1,000, repaid over 91 days to a year, with interest capped at 28% a year.

The rules sit in the Short-Term Loan Act, Ohio Revised Code sections 1321.35 to 1321.48. They are enforced by the Division of Financial Institutions (DFI), part of the Ohio Department of Commerce. The figures below come from the statute text as of September 2026.

The limits Ohio sets on a short-term loan

Rule Ohio limit (as of September 2026)
Maximum loan $1,000 principal (ORC 1321.39)
Interest 28% per year (ORC 1321.40)
Monthly maintenance fee Lesser of 10% of the loan or $30; none for active-duty service members and their dependents
Origination fee Up to 2%, only on loans of $500 or more
Term 91 days to one year; shorter only if the payment is at most 6% of gross or 7% of net monthly income
Rollovers Not permitted
Loans at once One per lender, $2,500 total across lenders (per DebtHammer)
Right to cancel By 5 p.m. on the third business day, by returning the principal

The 28% is the interest rate, not the whole cost. Section 1321.40 lets lenders add the maintenance fee, which cannot be added to the interest-bearing balance, plus capped check-collection and check-cashing charges. Section 1321.39 requires the lender to disclose the APR and total fees, and to print this warning: "The cost of this loan is higher than the average cost charged by financial institutions."

Payments must be substantially equal installments, so the installment structure itself works as the repayment plan. The sources we checked do not establish a cooling-off period between loans or a statewide loan database. The $2,500 and one-per-lender limits come from a consumer guide, not the statute text we reviewed. DFI can confirm both.

Online and tribal lenders

Anyone who makes, offers or brokers a short-term loan to an Ohio resident needs a DFI license, and loans by telephone or mail are banned outright. Under section 1321.36, a loan made without a license is void. The lender cannot collect principal, interest or fees.

Some tribal lenders claim sovereign immunity and advertise rates up to 699%, according to DebtHammer. That guide reports that Ohio courts have generally rejected the defense when the lender targets Ohio residents. Before you sign, check the lender in DFI's Consumer Finance Licensee Lookup.

One caveat applies to online loans. Banks and credit unions are exempt from this Act. In October 2025, DFI also said that nonbanks paid to arrange bank loans no longer need a Small Loan Act license, as Mayer Brown reported. A bank-issued loan sold through an app may therefore fall outside the table above.

Where else to look first

Credit unions and banks lend outside the Short-Term Loan Act. Our sources do not document the terms of credit union small-dollar loans or any Ohio assistance program, so ask your credit union directly what it offers. One change is pending: Senate Bill 456 would amend the separate consumer installment loan law. As of late September 2026 it was still in committee, and its details have not been published.

What an underwriter sees if you're closing soon

Because an Ohio short-term loan now lasts at least 91 days, it leaves a trail. The deposit and each installment show up on the bank statements your lender reviews. You should expect a request for a letter of explanation, which is a short signed note saying what the debit is.

The monthly payment is a debt, and it can count in your debt-to-income ratio. Your lender decides how it is treated.

The cleanest file has the loan paid off, with the payoff visible, before you apply. If you took one out in the last three business days, you can still cancel it by returning the principal.