Indiana Payday Loan Laws and Legislation

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In the state of Indiana payday lending operations are legal business according to the Ind. Code Ann. § 24-4.5-7-101 et seq. Under the term payday loans are understood as cash advances given to a person for a certain period (generally till the next paycheck) in order to cover some unexpected expenses. They are short-term small loans that are charged highly in terms of interest; plus finance fees should be also taken into consideration. The state of Indiana has got a number of regulations that control the activity of payday lending companies.

It is forbidden to grant borrowers loans in the amounts exceeding 20% of their monthly income. Moreover, it is not allowed to give loans that are more than $550 in amount with all the fees and finance charges included. These measures aim at protecting borrowers form unscrupulous lenders and not allow the former to get into more indebtedness. That is why borrowers are not allowed to get more than two loans at one time in Indiana and these loans should be from different lenders.

Besides, finance fees collected from the borrowers are also regulated by the laws in Indiana. According to these laws lenders are prohibited to charge more than 15% for a loan. Provided that a loan amounts to $401 to $500, the finance fee cannot exceed 10%; if it is $251 to $400 loan, finance fee should be not more than 13%, loans of $0 to $250 are generally charged the highest - 15%. Moreover, only one non-sufficient funds fee not more than $20 for a loan can be charged from a borrower. Any criminal actions against borrowers are prohibited in the state of Indiana.

According to the law, payday loans in Indiana should be repaid in the period of two weeks. Basically, rollovers are not allowed but three extensions can be given to a borrower provided that the latter is unable to pay off in time. After these extensions' period terminates a borrower should be offered an extended repayment plan without any fees that were not agreed on initially. A borrower is allowed to take another payday loan only after 7 days counting from the last 6 consecutive loans.

Payday lending businesses are strictly monitored in the state of Indiana in order to prevent any violations from the side of lenders and to protect the residents of the state. According to the law, a lender who commits a violation can be held liable and deprived of the possibility to collect any payments in the future, in some cases it is a fine of $1,000 to pay for a violation, or both. The Indiana Department of Financial Institutions is the authority body where to send requests and complaints about payday loans in Indiana to.

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