A Primer on Ohio’s Payday Lending Problem

Some people may believe that Ohio solved its payday loan crisis several years ago. In fact, it’s only gotten worse.

In 2008, the legislature passed a bill that capped interest rates on payday loans.  Ohio voters voted 2:1 to approve the measure at the ballot. Unfortunately, lenders exploited a loophole in the legislation allowing them to dramatically increase the fees they charge. Interest rates increased from an average APR of 391% before the reform, to the astonishing 591% it is today.

How expensive are Ohio’s payday loans?

In their own words. Major companies use Credit Service Organization statute to charge triple-digit interest rates.

A payday loan at 641% APR, $1,000 borrowed at a cost of $3,000.

A payday loan at 682% APR.

An auto-title loan at 399% APR, a $650 loan financed for $3,266.

Balloon payment loans due in less than one month of borrowing.

Auto-title loan so costly, other auto-title lenders sell refi loans. 

Who are payday loan borrowers?

The million Ohioans who have borrowed from a payday lender include families who are rural, urban, single parents, veterans, and others.

All Ohio residents are impacted because more than $145 million is going to mostly out-of-state lenders, while that money could be reinvested in Ohio.


  • One out of 10 Ohio adults has taken out a payday loan.
  • Borrowers are mainstream consumers- it is required to have a checking account and income to get a loan.
  • Seven in 10 borrowers report using the loans to cover basic household expenses.
  • The average borrower signs up for a two-week loan, but remains in debt for half the year.


Payday lenders and the Ohio economy

There are more than 650 payday loan storefronts in Ohio, located in 76 of Ohio’s 88 counties.

Two-thirds of payday loan stores are run by out-of-state companies.

Lessons from Colorado’s 2010 Payday Loan Reform

In 2010 Colorado lawmakers enacted legislation that requires all payday loans to be repayable over a longer period of time with affordable payments and lower, prices. Colorado lawmakers cut prices in their state by two-thirds, saving borrowers more than $40 million per year.

The payday lending market in Colorado is operating efficiently and profitably today. Some payday loan stores consolidated after reform, while customers across the state still have widespread access to loans. These common sense measures serve as a model for Ohio and other states that allow lenders to charge excessive rates.

Ohioans Want Reform

A recently released poll commissioned by The Pew Charitable Trusts shows that Ohio residents have an overwhelmingly negative view of the payday loan industry and strongly favor proposed reforms. 95% of those polled favor reforms that cap interest rates at lower rates. Click here to learn more about the poll. 

Why We Support House Bill 123

This bipartisan legislation will reform the payday loan market, save Ohioans $75 million each year, and maintain access to credit for borrowers. Protections in this reform include:

  • Rates that are fair for borrowers and viable for lenders.
  • Affordable installments payments that shield 95% of a borrower’s income from lenders.
  • Reasonable time to repay.
  • Fees and interest spread evenly over the life of the loan, rather than front-loaded.

Click here for an outline of the Payday Loan Reform Bill.