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Ohio Interest Rates Laws

As a matter of practice, consumers regularly pay higher interest rates than what is legally allowed -- by waiving these protections in order to agree to a loan's terms. So while they're relatively meaningless in most situations, most states have laws capping the amount of interest allowed. Ohio interest rates laws, for instance, cap interest at 8 percent.

Specifically, Ohio's interest rate law states that parties may agree to a higher interest rate than the 8 percent statutory limit when:

  1. The original amount of principal is greater than $100,000
  2. Payment is to a broker or dealer registered under the Securities and Exchange Act of 1934 (which includes all publicly traded companies)
  3. Debt is secured by a mortgage or deed of trust
  4. Debt is payable on demand or in one installment and not secured by household goods
  5. Any business loan

These limits are often referred to as "usury" laws, a term dating back to Medieval times. Usury originally was used a derogatory term for lending money at any interest rate, but later became a term to describe excessive rates of interest. Some cultures continue to condemn the use of interest-bearing loans from a moral standpoint.

The reason we tend to pay much higher rates of interest on credit card balances and payday loans, to give a couple of examples, is because we agree to these rates. However, consumers also regularly agree to terms that allow credit card issuers to raise rates even higher after the card is issued.

As with most financial transactions, it always pays to read the fine print.

The main details of Ohio's interest rate laws are highlighted in the following chart. See Usury Laws and Limits on Credit Card Interest Rates for more details.

Legal Maximum Rate of Interest 8% (§1343.01)
Penalty for Usury (Unlawful Interest Rate) Excess interest applied to principal (§1343.04)
Interest Rates on Judgments Contract rate (§1343.02), otherwise 10% (§1343.03)
Exceptions Amount exceeds $100,000; broker/dealer registered; secured by mortgage or deed of trust; business loan (§1343.01)

Note: State laws are constantly changing -- contact an Ohio consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.

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