The Short Term Loan

ORC 1321.41 — three business days to undo it, and no rollovers

Ohio rewrote its short term lending law in 2018, and the new chapter is unusually specific about what a lender may not do. Most of the protections in it are worth more to somebody already in a loan than to somebody deciding whether to take one.

Three business days to hand the money back and walk away. The loan may be rescinded or cancelled up to five in the afternoon on the third business day after the day of the transaction, by returning the amount originally contracted for. Not the amount plus a fee, and not at the lender's discretion. It is a window that exists whether or not anybody at the counter mentioned it.

ORC 1321.41

A loan to pay off a loan is prohibited. A licensee may not make a loan to retire an existing short term loan. That is the rollover, and it is the mechanism by which a two week problem became a two year one under the old law. A lender offering to refinance somebody out of a loan they are struggling with is offering something the chapter does not permit.

ORC 1321.41

What the chapter does	The detail
Caps the size	One thousand dollars
Caps the term	Up to one year
Caps the interest	Twenty eight per cent a year
Bars a prepayment fee	No charge for paying in full before the maturity date
Bars collateral	Not a vehicle title, not real property, not physical assets
Bars a waiver	A borrower cannot be required to give up legal recourse

Twenty eight per cent is not what the loan costs. The cap is on interest, and the chapter defines interest so that it excludes the monthly maintenance fee, the loan origination charge, the check collection charge and the check cashing fee. Those are permitted separately. So the honest description is that the interest rate is capped at twenty eight and the total cost of borrowing is higher than twenty eight, and a comparison between two offers has to be made on the fees rather than on the rate.

A lender taking a car title as security for a loan of this kind is doing something the prohibitions section does not allow, which is worth knowing because the title loan shopfront did not disappear when the law changed.

ORC 1321.41

“What day was this signed, and what are the fees on top of the rate.”

Loans made under other lending chapters, pawn transactions and credit service organisations run under different rules and the figures on this page do not describe them. Which chapter a particular loan was made under is the first question and it is not always obvious from the shopfront. Whether a loan complied, what a violation is worth, and what can be done about one are questions for a licensed Ohio attorney, and legal aid offices across the state handle consumer lending cases.

Sources for this section (3)

ORC 1321.41 — What a short term lender may not do, including the three days to cancel
ORC 1321.35 — The short term loan law, and what counts as one
ORC 1321.40 — The fees a short term loan may carry alongside interest

Legal information, not legal advice. Verified as of September 2026. Talk to a licensed Ohio attorney about your situation.

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