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.
Who handles this in Ohio: legal aid programs, lawyer referral and the state offices, listed in the Ohio directory.
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 The loan may be rescinded or cancelled up to five in the afternoon on the third business day after the day of the transaction, by returning the amount originally contracted for.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.
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 short problem became a long 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.
| What the chapter does | The detail |
|---|---|
| What the chapter doesCaps the size | The detailOne thousand dollars |
| What the chapter doesSets the term | The detailNinety one days to one year, and shorter only where the monthly payment is no more than six per cent of gross or seven per cent of net monthly income |
| What the chapter doesCaps the interest | The detailTwenty eight percent a year |
| What the chapter doesBars a prepayment fee | The detailNo charge for paying in full before the maturity date |
| What the chapter doesBars collateral | The detailNot a vehicle title, not real property, not physical assets |
| What the chapter doesBars a waiver | The detailA borrower cannot be required to give up legal recourse |
Twenty eight percent 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.
“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 organizations 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 (4)
- 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
- ORC 1321.39 — What every short term loan has to meet: the one thousand dollar cap, the term, the written contract and the right to cancel
Legal information, not legal advice. Verified as of September 2026. Applying it to a particular situation is the work of a licensed Ohio attorney.