10
Aug

HB 123 Ohio Small Dollar Loan Law

Ohio Payday Loan and Credit Services organization Bill 123 as passed: The bill will require lenders offering certain types of consumer loans and regulated under the Small Loan, General Loan, or Credit Service Organization laws to obtain licensure instead under the Short-Term Loan Law.

Overview
In FY 2018, the Consumer Finance Section of the Division of Financial Institutions within the Department of Commerce (COM) oversaw approximately 1,600 licenses and registrations under the various lender laws covered by the bill. Overall, the changes in the bill will steer lenders who currently offer small-dollar, shorter term loans and wish to continue to do so in the future from licensure under the Small Loan, General Loan, or Credit Services Organization laws instead to licensure under the Short-Term Loan Law.

The modifications to the Short-Term Loan Law in the bill include (1) increasing the maximum loan amount from $500 under current law to $1,000 under the bill, (2) increasing the duration of loans from at least 31 days to a maximum duration of one year, (3) establishing a monthly maintenance fee that is the lesser of 10% of the originally contracted loan amount or $30, and (4) establishing requirements for a borrower’s eligibility for a loan that has a duration less than 91 days. The bill also caps the total amount of fees and charges that can be charged to 60% of the  originally contracted loan amount.

To differentiate between the loans that can be made under the Short-Term Loan Law, the bill requires that loans made under the Small Loan Law and General Loan Law have either a minimum duration of more than one year or a loan amount greater than $1,000. Additionally, the bill prohibits credit services organizations (loan brokering services) from brokering extensions of credit when the amount is less than $5,000 and the repayment term is under one year.

Consumer finance licenses and registrations

The bill will require payday lenders to… here’s the actual Bill 123 as passed and signed by the Ohio Governor:

HB 123 Passed – Effective October 2018
How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

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