Chapter 1321 | Various Loans

(A) As used in sections 1321.01 to 1321.19 of the Revised Code:

(1) "Person" includes individuals, partnerships, associations, trusts, corporations, and all other legal entities.

(2) "License" means a license issued under sections 1321.01 to 1321.19 of the Revised Code to make loans at a single place of business.

(3) "Licensee" means a person to whom one or more licenses have been issued.

(4) "Principal amount" means the amount of cash paid to, or paid or payable for the account of, the borrower.

(5) "Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan or an application for a loan, however denominated, but does not include default charges, deferment charges, insurance charges or premiums, court costs, loan origination charges, check collection charges, credit line charges, credit report charges, or other fees and charges specifically authorized by law.

(6) "Interest-bearing loan" means a loan in which the debt is expressed as the principal amount and interest is computed, charged, and collected on unpaid principal balances outstanding from time to time.

(7) "Precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of interest computed in advance on the assumption that all scheduled payments will be made when due.

(8) "Actuarial method" means the method of allocating payments made on a loan between the principal amount and interest whereby a payment is applied first to the accumulated interest and the remainder to the unpaid principal amount.

(9) "Applicable charge" means the amount of interest attributable to each monthly installment period of the loan contract. The applicable charge is computed as if each installment period were one month and any charge for extending the first installment period beyond one month is ignored. In the case of loans originally scheduled to be repaid in sixty-one months or less, the applicable charge for any installment period is that proportion of the total interest contracted for, as the balance scheduled to be outstanding during that period bears to the sum of all of the periodic balances, all determined according to the payment schedule originally contracted for. In all other cases, the applicable charge for any installment period is that which would have been made for such period had the loan been made on an interest-bearing basis at the single rate provided in division (A) of section 1321.13 of the Revised Code, based upon the assumption that all payments were made according to schedule.

(10) "Annual percentage rate" means the ratio of the interest on a loan to the unpaid principal balances on the loan for any period of time, expressed on an annual basis.

(11) "Refinancing" means a loan the proceeds of which are used in whole or in part to pay the unpaid balance of a prior loan made by the same licensee to the same borrower under sections 1321.01 to 1321.19 of the Revised Code.

(12) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

(B) The division of financial institutions is responsible for the administration of sections 1321.01 to 1321.19 of the Revised Code. Neither the superintendent of the division, nor any deputy, assistant, clerk, examiner, or other person employed by the division to assist in the administration of such sections shall be interested, directly or indirectly, in the business licensed under the sections and any person so interested or who becomes so interested shall not be eligible to hold or retain any such position.

Last updated November 3, 2021 at 5:34 PM

No person shall engage in the business of lending money, credit, or choses in action in amounts of five thousand dollars or less, or exact, contract for, or receive, directly or indirectly, on or in connection with any such loan, any interest and charges that in the aggregate are greater than the interest and charges that the lender would be permitted to charge for a loan of money if the lender were not a licensee, without first having obtained a license from the division of financial institutions under sections 1321.01 to 1321.19 of the Revised Code.

Sections 1321.01 to 1321.19 of the Revised Code do not apply to any person doing business under and as permitted by any law of this state, another state, or the United States relating to banks, savings banks, savings societies, trust companies, credit unions, savings and loan associations substantially all the business of which is confined to loans on real estate mortgages and evidences of their own indebtedness; to registrants conducting business pursuant to sections 1321.51 to 1321.60 of the Revised Code; to licensees conducting business pursuant to sections 1321.62 to 1321.702 of the Revised Code; to licensees conducting business pursuant to sections 1321.71 to 1321.83 of the Revised Code; to licensees doing business pursuant to sections 1321.35 to 1321.48 of the Revised Code; to registrants conducting business as mortgage lenders under Chapter 1322. of the Revised Code; or to any entity who is licensed pursuant to Title XXXIX of the Revised Code, who makes advances or loans to any person who is licensed to sell insurance pursuant to that Title, and who is authorized in writing by that entity to sell insurance. No person engaged in the business of selling tangible goods or services related thereto may receive or retain a license under sections 1321.01 to 1321.19 of the Revised Code for such place of business.

The first paragraph of this section applies to any person, who by any device, subterfuge, or pretense, charges, contracts for, or receives greater interest, consideration, or charges than that authorized by this section for any such loan or use of money or for any such loan, use, or sale of credit, or who for a fee or any manner of compensation arranges or offers to find or arrange for another person to make any such loan, use, or sale of credit. This section does not preclude the acquiring, directly or indirectly, by purchase or discount, of a bona fide obligation for goods or services when such obligation is payable directly to the person who provided the goods or services.

Any contract of loan in the making or collection of which an act is done by the lender that violates this section is void and the lender has no right to collect, receive, or retain any principal, interest, or charges.

The Legislative Service Commission presents the text of this section as a composite of the section as amended by multiple acts of the General Assembly. This presentation recognizes the principle stated in R.C. 1.52(B) that amendments are to be harmonized if reasonably capable of simultaneous operation.

Last updated November 3, 2021 at 5:35 PM

Application for a license shall be in writing, under oath, and in the form prescribed by the division of financial institutions, and shall contain the name and address of the applicant, and, if the applicant is a partnership or association, of every member thereof, and, if a corporation, of each officer and director thereof; also the approximate location where the business is to be conducted and such further relevant information as the division requires. At the time of making such application, the applicant shall pay to the division a license fee as determined by the superintendent of financial institutions pursuant to section 1321.20 of the Revised Code and a nonrefundable investigation fee of two hundred dollars. No license fee or any portion thereof shall be refunded after a license has been issued.

Last updated November 3, 2021 at 5:35 PM

(A) Except as otherwise provided in division (B) of this section, upon the filing of an application under section 1321.03 of the Revised Code and payment of fees pursuant to section 1321.20 of the Revised Code, the division of financial institutions shall investigate the facts concerning the applicant and the requirements provided for in divisions (A)(1) and (2) of this section.

The division shall approve the application and issue and deliver a license to the applicant if the division finds both of the following:

(1) That the financial responsibility, experience, and general fitness of the applicant and of the members thereof, if the applicant is a partnership or an association, and of the officers and directors thereof, if the applicant is a corporation, are such as to warrant the belief that the business will be operated lawfully, honestly, and fairly under sections 1321.01 to 1321.19 of the Revised Code and within the purposes of those sections, that the applicant has fully complied with those sections, and that the applicant is qualified to act as a licensed lender;

(2) That the applicant has available for the operation of such business cash or moneys deposited in a readily accessible fund or account of not less than twenty-five thousand dollars.

If the division does not so find, it shall enter an order denying such application and forthwith notify the applicant of the denial, the grounds for the denial, and the applicant's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code. In the event of denial, the division shall return the license fee but shall retain the investigation fee.

(B) The division shall issue and deliver a license in accordance with Chapter 4796. of the Revised Code to an applicant if either of the following applies:

(1) The applicant holds a license in another state.

(2) The applicant has satisfactory work experience, a government certification, or a private certification as described in that chapter in the business of lending money, credit, or choses in action in amounts of five thousand dollars or less in a state that does not issue that license.

Last updated December 29, 2023 at 7:26 AM

Each license shall state the address at which the business is to be conducted and shall state fully the name of the licensee. Each license shall be kept conspicuously posted in the place of business of the licensee and is not transferable or assignable.

Each license shall remain in effect until surrendered, revoked, or suspended under section 1321.08 or 3123.47 of the Revised Code. Every licensee shall each year pay to the division of financial institutions a license fee and an assessment as determined by the superintendent pursuant to section 1321.20 of the Revised Code. Payment of such renewal fee shall be according to the provisions of this section and the standard renewal procedure of sections 4745.01 to 4745.03 of the Revised Code. No other or further license fee or assessment shall be required from any such licensee by the state or any political subdivision in the state.

Every licensee shall maintain for each license current assets of at least ten thousand dollars, either in use or readily available for use in the conduct of the business.

Last updated November 3, 2021 at 5:37 PM

Not more than one place of business shall be maintained under the same license issued under sections 1321.01 to 1321.05 of the Revised Code, but the division of financial institutions may issue additional licenses to the same licensee upon compliance with such sections.

No change in the place of business of a licensee to a location outside the original municipal corporation shall be permitted under the same license. When a licensee wishes to change the licensee's place of business within the same municipal corporation, the licensee shall give written notice thereof in advance to the division which shall provide a license for the new address, without cost.

Sections 1321.01 to 1321.19 of the Revised Code do not limit the loans of any licensee to residents of the community in which the licensed place of business is situated.

Last updated November 3, 2021 at 5:37 PM

At least once each year the division of financial institutions shall make an examination of the business, loans, books, papers, and records of each licensee so far as they pertain to the licensed business, and it may make such an examination more frequently if it is necessary for the proper administration of sections 1321.01 to 1321.19 of the Revised Code.

For the purpose of discovering violations, the division may at any time investigate the business and examine the books, accounts, papers, and records used therein, of:

(B) Other persons engaged in the business described in section 1321.02 of the Revised Code or participating in such business as principal, agent, broker, or otherwise;

(C) Any person whom the division has reasonable cause to believe has violated, is violating, or is about to violate sections 1321.01 to 1321.19 of the Revised Code, whether or not the person claims to act under such sections. For the purpose of this section, any person who advertises, solicits, or holds self out as willing to make, find, or arrange for another person to make loan transactions in the amount or of the value of five thousand dollars or less, is presumed to be engaged in the business described in the first paragraph of section 1321.02 of the Revised Code.

For the purpose of this section, the division shall have and be given free access to the offices and places of business, files, safes, and vaults of all such persons, and may require the attendance of, and examine under oath, any person relative to such loans or such business or to the subject matter of any examination, investigation, or hearing. The division may require the attendance of such witnesses and the production of such books, records, and papers, as may be required either by the division or by any party to a hearing before the division, and for that purpose may issue a subpoena for any witness or a subpoena duces tecum, to compel the production of any books, records, or papers, directed to the sheriff of the county where such witness resides or is found, which shall be served and returned in the same manner as a subpoena in criminal cases is served and returned.

The fees of the sheriff shall be the same as that allowed in the court of common pleas in criminal cases. Witnesses shall be paid the fees and mileage provided for under section 119.094 of the Revised Code. Fees and mileage shall be paid from the funds of the division. No witness subpoenaed at the instance of parties other than the division is entitled to compensation from the state for attendance or travel unless the division certifies that the witness' testimony was material to the subject matter of the hearing.

If any person fails to file any statement or report, or fails to obey any subpoena, or to give testimony, or to answer questions, or to produce any books, records, documents, accounts, or papers as required by the division under sections 1321.01 to 1321.19 of the Revised Code, any court of common pleas, upon application made to it and upon proof being made of such failure, may make an order awarding process of subpoena or subpoena duces tecum out of the court for such witness to appear and testify before the division, and may make an order that any person give testimony and answer questions as required, and produce books, records, documents, accounts, or papers as required. Upon filing such order with the clerk of the court of common pleas, the clerk shall, under the seal of the court, issue process of subpoena to appear before the division at a time and place named therein, and so from day to day until the examination of such person is completed. The subpoena may contain a direction that such witness bring to such examination any books, records, documents, accounts, or papers therein mentioned, and the clerk shall issue, under the seal of the court, such other or further orders in reference to the examination, appearance, and production of books, records, documents, accounts, or papers as the court directs. If any person so summoned by subpoena issued by the clerk fails to obey the subpoena or to answer any directions therein, or to give testimony, or to answer questions as required, or to produce any books, records, documents, accounts, or papers as required, or if any such person fails to obey any order, the court, on motion supported by proof, may order an attachment for contempt to be issued against any person charged with disobeying any order or injunction issued out of the court of common pleas under sections 1321.01 to 1321.19 of the Revised Code. If the person so offending is brought before the court by virtue of such attachment, and if upon a hearing such disobedience appears, the court may order the offender to be committed and kept in close custody until the further order of the court.

Last updated November 4, 2021 at 3:31 PM

In accordance with Chapter 119. of the Revised Code:

(A) The division of financial institutions shall, upon written notice to the licensee stating the contemplated action and the grounds therefor, and upon reasonable opportunity to be heard, suspend or revoke any license issued by the division if it finds that:

(1) The licensee is in default in the payment of the annual license fee or assessment prescribed in section 1321.20 of the Revised Code or has failed to comply with any order of the division made and entered under division (A) of section 1321.10 of the Revised Code;

(2) The licensee has continued to violate any of the provisions of sections 1321.01 to 1321.19 of the Revised Code or any rule promulgated under division (A) of section 1321.10 of the Revised Code after receiving notice of such violation or violations from the division;

(3) Any fact or condition exists which if it had existed or had been known to exist at the time of the original application for such license, which fact or condition was not then known to the division, clearly would have warranted the division in refusing originally to issue such license.

(B) If the division finds that there exists probable cause for the suspension or revocation of any license under division (A) of this section and that enforcement of sections 1321.01 to 1321.19 of the Revised Code requires immediate suspension of the license pending complete investigation, it may, upon three days' written notice, and hearing, enter an order suspending the license for a period not exceeding thirty days, during which period of suspension no loans may be made under the license, but the licensee may receive payments on existing loans. Upon completion of such investigation the division shall either reinstate the license or further suspend the license for a further period or give the licensee notice of the contemplated revocation of the license, the grounds for the revocation, and the licensee's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code.

(C) Any licensee may surrender any license by delivering it to the division with written notice of its surrender. Such surrender shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender.

(D) No revocation or suspension of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any borrower nor shall such action affect the right of the licensee to collect the amounts due under the contract, or to enforce the contract.

(E) The division may reinstate or issue a new license to a person whose license has been revoked if no fact or condition then exists which clearly would have warranted the division in refusing originally to issue the license.

Last updated November 3, 2021 at 5:38 PM

(A) Every licensee shall keep and use in the licensee's business such books, accounts, and records as will enable the division of financial institutions to determine whether the licensee is complying with sections 1321.01 to 1321.19 of the Revised Code and with the orders and rules made by the division under those sections. Every licensee shall preserve such books, accounts, and records for at least two years after making the final entry on any loan recorded therein. Accounting systems maintained in whole or in part by mechanical or electronic data processing methods that provide information equivalent to that otherwise required are acceptable for this purpose.

As required by the superintendent of financial institutions, every licensee each year shall file a report with the division giving such relevant information concerning the business and operations, during the preceding calendar year, of each licensed place of business conducted by the licensee within the state. If a licensee has more than one place of business within this state it is optional with the licensee to furnish the report for each location, or a composite report for all locations. Such report shall be made under oath in the form prescribed by the division, which shall make and publish annually an analysis and recapitulation of such reports. Such licensee reports are not public records and shall only be used by the division for the purpose of enforcing sections 1321.01 to 1321.19 of the Revised Code or any rules or orders made in compliance with those sections. Such licensee reports may be introduced into evidence or disclosed when and in the manner authorized in section 1181.25 of the Revised Code, or in connection with criminal proceedings.

This section does not prevent the division from releasing to or exchanging with other financial institution regulatory authorities information relating to licensees.

(B) For purposes of this section, "financial institution regulatory authority" includes a regulator of a business activity in which a licensee is engaged, or has applied to engage in, to the extent that the regulator has jurisdiction over a licensee engaged in that business activity. A licensee is engaged in a business activity, and a regulator of that business activity has jurisdiction over the licensee, whether the licensee conducts the activity directly or a subsidiary or affiliate of the licensee conducts the activity.

Last updated November 5, 2021 at 4:18 PM

In accordance with Chapter 119. of the Revised Code:

(A) The division of financial institutions may adopt rules and the superintendent of financial institutions may issue specific orders for the enforcement of sections 1321.01 to 1321.19 of the Revised Code. Every ruling, demand, requirement, and similar administrative act may be in the form of a written order. Every rule and order shall be a public record. After promulgation, a copy of every rule shall be mailed to all licensees.

(B) The division may, whenever it has reasonable cause to believe that any person has violated, is violating, or is threatening to or intends to violate sections 1321.01 to 1321.19 of the Revised Code, enter an order requiring the person to desist or to refrain from such violation; and an action may be brought on the relation of the superintendent to enjoin the person from continuing or engaging in such violation or from doing any acts in furtherance thereof. Such action shall be conducted under the direction and supervision of the attorney general. In any such action, an order or judgment may be entered awarding such preliminary or final injunction as is deemed proper. In addition to all other means provided for the enforcement of a restraining order or injunction, the court in which such action is brought may impound and appoint a receiver for the property and business of the defendants including books, papers, documents, and records pertaining thereto or so much thereof as the court finds reasonably necessary to prevent further violations of sections 1321.01 to 1321.19 of the Revised Code, through or by means of the use of said property and business. Such receiver, when appointed and qualified, has such powers and duties as to custody, collection, administration, winding up, and liquidation of the property and business as may be conferred upon the receiver by the court.

(C) Upon application of any person, the division may certify, under the seal of the superintendent, a statement relative to any matter that is the subject of public examination and disclosure. The division may likewise furnish under the seal of the superintendent a certified copy of any order issued by the division, and in any court such certified statements and such certified copies are prima-facie evidence of the facts disclosed therein or of the making of such order.

Last updated November 3, 2021 at 5:40 PM

No licensee or other person subject to sections 1321.01 to 1321.19 of the Revised Code shall advertise, display, distribute, or broadcast or cause or permit to be advertised, displayed, distributed, or broadcast, any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for loans made under those sections. The division of financial institutions shall require that charges or rates of charge, whenever stated by a licensee, be stated fully and clearly in such manner as may be deemed necessary to prevent misunderstanding thereof by prospective borrowers.

No licensee shall conduct the business of making loans under sections 1321.01 to 1321.19 of the Revised Code, within any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, if the division of financial institutions finds, after hearing, that the other business is of such nature that such conduct tends to conceal evasion of those sections or of the rules made under those sections and orders the licensee in writing to desist from the conduct.

No licensee shall conduct the business of making loans under sections 1321.01 to 1321.19 of the Revised Code, under any other name, or at any other place of business within this state than that named in the license.

No licensee shall take a lien upon real estate as security for any loan made under those sections except such lien as is created upon the filing or recording of a certificate of judgment.

Last updated November 3, 2021 at 5:40 PM

(A) Notwithstanding any other provisions of the Revised Code, a licensee may contract for and receive interest, calculated according to the actuarial method, at a rate or rates not exceeding twenty-eight per cent per year on that portion of the unpaid principal balance of the loan not exceeding one thousand dollars and twenty-two per cent per year on any part of the unpaid principal balance exceeding one thousand dollars. A licensee may contract for and receive interest at the single annual rate that would earn the same total interest at maturity of the loan, when the loan is paid according to its agreed terms, as would be earned by the application of the graduated rates set forth in this division. Loans may be interest-bearing or precomputed.

(B) For purposes of computation of time on interest-bearing and precomputed loans, including, but not limited to, the calculation of interest, a month is considered one-twelfth of a year, and a day is considered one three hundred sixty-fifth of a year when calculation is made for a fraction of a month. A year is as defined in section 1.44 of the Revised Code. A month is that period described in section 1.45 of the Revised Code.

(C) With respect to interest-bearing loans:

(1) Interest shall be computed on unpaid principal balances outstanding from time to time, for the time outstanding. Each payment shall be applied first to unpaid charges and fees, then to interest, and the remainder to the unpaid principal balance. However, if the amount of the payment is insufficient to pay the accumulated interest, the unpaid interest continues to accumulate to be paid from the proceeds of subsequent payments and is not added to the principal balance. If the maturity of the loan is accelerated for any reason and judgment is entered, the licensee may thereafter charge the same rate or rates of interest as provided in the loan contract.

(2) Interest shall not be compounded. However, if part or all of the consideration for a new loan contract is the unpaid principal balance of a prior loan, then the principal amount payable under the new loan contract may include any unpaid interest that has accrued. The resulting loan contract shall be deemed a new and separate loan transaction for purposes of this section. The unpaid principal balance of a precomputed loan is the balance due after refund or credit of unearned interest as provided in division (D)(3) of this section.

(D) With respect to precomputed loans:

(1) Loans shall be repayable in substantially equal and consecutive monthly installments of principal and interest combined, except that the first installment period may exceed one month by not more than fifteen days, and the first installment payment amount may be larger than the remaining payments by the amount of interest charged for the extra days; and provided further that monthly installment payment dates may be omitted to accommodate borrowers with seasonal income.

(2) Payments may be applied to the combined total of principal and precomputed interest until maturity of the loan. A licensee may charge interest after the original or deferred maturity of a precomputed loan at the rate or rates provided in division (A) of this section on all unpaid principal balances for the time outstanding.

(3) When any loan contract is paid in full by cash, renewal, refinancing, or a new loan, one month or more before the final installment due date, the licensee shall refund, or credit the borrower with, the total of the applicable charges for all fully unexpired installment periods, as originally scheduled or as deferred, that follow the day of prepayment. If the prepayment is made other than on a scheduled installment installment due date, the nearest scheduled due date shall be used in such computation. If the prepayment occurs prior to the first installment due date, the licensee may retain one-thirtieth of the applicable charge for a first installment period of one month for each day from date of loan to date of prepayment, and shall refund, or credit the borrower with, the balance of the total interest contracted for. If the maturity of the loan is accelerated for any reason and judgment is entered, the licensee shall credit the borrower with the same refund as if prepayment in full had been made on the date the judgment is entered and may thereafter convert the loan to an interest-bearing loan at the same rate or rates of interest as provided in the loan contract. If the maturity of the loan is accelerated for any reason, the licensee may convert the loan to an interest-bearing loan at the same rate or rates of interest as provided in the loan contract, provided the licensee credits the borrower with the same refund on the precomputed loan as if prepayment in full had been made on the date of the conversion.

(4) If the parties agree in writing, either in the loan contract or in a subsequent agreement, to a deferment of wholly unpaid installments, a licensee may grant a deferment and may collect a deferment charge as provided in this section. A deferment postpones the scheduled due date of the earliest unpaid installment and all subsequent installments as originally scheduled, or as previously deferred, for a period equal to the deferment period. The deferment period is that period during which no installment is scheduled to be paid by reason of the deferment. The deferment charge for a one-month period may not exceed the applicable charge for the installment period immediately following the due date of the last undeferred installment. A proportionate charge may be made for deferment for periods of more or less than one month. A deferment charge is earned prorata during the deferment period and is fully earned on the last day of the deferment period. If a loan is prepaid in full during a deferment period, the licensee shall make, or credit to the borrower, a refund of the unearned deferment charge in addition to any other refund or credit made for prepayment of the loan in full.

(E) A licensee, at the request of the borrower, may obtain, on one or more borrowers, credit life insurance, credit accident and health insurance, and unemployment insurance. The premium or identifiable charge for the insurance may be included in the principal amount of the loan and may not exceed the premium rate filed by the insurer with the superintendent of insurance and not disapproved by him. If a licensee obtains the insurance at the request of the borrower, the borrower shall have the right to cancel the insurance for a period of twenty-five days after the loan is made. If the borrower chooses to cancel the insurance, the borrower shall give the licensee written notice of this choice and shall return all of the policies or certificates of insurance or notices of proposed insurance to the licensee during such period, and the full premium or identifiable charge for the insurance shall be refunded to the borrower by the licensee. If the borrower requests, in the notice to cancel the insurance, that this refund be applied to reduce the balance of a precomputed loan, the licensee shall credit the amount of the refund plus the amount of interest applicable to the refund to the loan balance.

(F) A licensee may require the borrower to provide insurance or a loss payable endorsement covering reasonable risks of loss, damage, and destruction of property used as security for the loan and with the consent of the borrower such insurance may cover property other than that which is security for the loan. The amount and term of required property insurance shall be reasonable in relation to the amount and term of the loan contract and the type and value of the security, and the insurance shall be procured in accordance with the insurance laws of this state. The purchase of this insurance through the licensee or an agent or broker designated by the licensee shall not be a condition precedent to the granting of the loan. If the borrower purchases the insurance from or through the licensee or from another source, the premium may be included in the principal amount of the loan.

(G) In addition to the interest and charges provided for by this section, no further or other amount shall be charged or required by the licensee, except the amounts of fees authorized by law to record, file, or release security interests on a loan and fees for credit reports, which amounts may be included in the principal amount of the loan or collected at any time after the loan is made, and except costs and disbursements to which the licensee may become entitled by law in connection with any suit to collect a loan or any lawful activity to realize on a security interest after default.

(H) If the loan contract or security instrument contains covenants by the borrower to perform certain duties pertaining to insuring or preserving security and the licensee pursuant to the loan contract or security instrument pays for performance of the duties on behalf of the borrower, the licensee may add the amounts paid to the unpaid principal balance of the loan or collect them separately. A charge for interest may be made for sums advanced not exceeding the rate of interest permitted by division (A) of this section. Within a reasonable time after advancing a sum, the licensee shall notify the borrower in writing of the amount advanced, any interest charged with respect to the amount advanced, any revised payment schedule, and shall include a brief description of the reason for the advance.

(I) A licensee may charge and receive loan origination charges not exceeding the following:

(1) On loans in the principal amount of five hundred dollars of less, the greater of fifteen dollars or one per cent of the principal amount of the loan and, on each refinancing made more than six months after the original loan and any previous refinancing, not exceeding fifteen dollars;

(2) On all other loans, the greater of thirty dollars or one percent of the principal amount of the loan and, on each refinancing, not exceeding thirty dollars. Loan origination charges may be paid by the borrower at the time of the loan or may be included in the principal amount of the loan.

(J) A licensee may charge and receive check collection charges not greater than twenty dollars plus any amount passed on from other financial institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason.

(K) If the loan contract so provides, a licensee may collect a default charge on any installment not paid in full within ten days after its due date. For this purpose, all installments are considered paid in the order in which they become due. Any amounts applied to an outstanding loan balance as a result of voluntary release of a security interest, sale of security on the loan, or cancellation of insurance shall be considered payments on the loan, unless the parties otherwise agree in writing at the time the amounts are applied. The amount of the default charge shall not exceed the greater of five per cent of the scheduled installment or five dollars.

Last updated November 3, 2021 at 5:41 PM