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Ohio Installment loans probably got the name because when a person borrows money they are supposed to make the payments with the next pay check. This is why you will find that most people borrow the money when they are faced with an emergency financial situation where they cannot raise the money immediately such as hospital bills, rent, car repair and so forth.
It is usually possible to get the money within 24 hours. These have however raised a lot of criticism from the public as well as the government citing that the loans normally trap unsuspecting or poor people into a life of debt when they are not able to pay off the loans on time.
This is because they normally warrant high profits since they are short term thus lenders deems it fit to raise the service charges and interest rates. The lenders mostly require the person borrowing cash to present a post dated check that will be used to pay the principal money borrowed in addition to the fees and interest. This prompted the drafting of Ohio Installment loans laws that are spelled out in the Short Term loan Act which came into effect in 2008 in the state. This helped to abolish the crazy charges that the lenders had before where they would go as far as charging more than 300% in fees and interest. This brought down the rate to something more reasonable limiting the interest rate charged by the borrowers to be limited to 28%. Other sectors that the laws affect include.
Limit On Time As Well As Number of Loans
As a means of protecting the borrowers to get something that they can handle and will not easily lead them into debt, the Ohio Installment loans limits the total amount of money that a person can borrow to $ 500. The borrowers do not have the freedom to get the loans anytime they want because this is also limited to a maximum of 4 times in a period of one year. In line with this, the borrower is also not supposed to have any outstanding loans at the time they are applying for their current loan. Once you go ahead and decide that you want to apply for the loan, it is important to note that the law stipulates that it should be paid back within a period of 31 days.
It is however not fair to mention that the borrowers are also entitled to a cooling off period. This is the period of time where they are not supposed to apply for the loan after they are done with the first one. The period lasts for a total of 90 days. This way, individuals do not rely so much on the loans thus it becomes easier not to fall into debt because they are not bombarded with high-interest loans that they have to pay from their own pockets. This might also encourage financial discipline because a person does not have a place to run to get quick cash.
No Rollovers On North Carolina Installment Loans
Research has shown that most people who opt for the Ohio Installment loans do not normally have access to other different types of loans such as the use of the credit card. It is quite possible to presume that a person who desperately needs a loan of about $400 does not really have the money that is needed to pay it back once they have received their next paycheck. If they use the money they have, it can end up creating another gap for another financial emergency. Most borrowers will try and solve this problem by adding some additional time that the borrower can pay back the money but they will also include a penalty fee instead of accepting installments or partial payments. This was referred to as rollover but it was done away with in 2008 with the creation of the loan act. The law stipulates that lenders should accept installment payment option.
New Industry Practices
There are some complaints however that most lenders do not want to be guided by the Ohio Installment loans laws because they want to continue charging higher fees and interest rates. They are coming up with new practices where they can collect more money thus borrowers need to be on the look out not to fall for this traps.