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Payday lending industry in Indiana

Payday lending activities are regulated by the Ind. Code Ann. § 24-4.5-7-101 et seq. and considered to be legal in Indiana. Payday loans are identified as small loans offered for an established period of time (usually till a customer receives his next paycheck). These loans are generally used to handle with unexpected emergencies. Since payday loans are short-termed, high interest rates together with considerable financial charges are applied to them. Therefore, certain legislative acts are aimed at controlling operations of payday lenders in the State.

Payday loans that make up more than 20% of a borrower’s monthly income are banned in Indiana. In addition, loans exceeding $550 (this sum includes all financial charges and fees) aren’t allowed either. The purpose of these regulations is safeguarding customers against dishonest lending companies and keeping them away from the debt cycle they can get. It is the reason why payday borrowers are forbidden to take three and more loans at a time. Moreover, if a customer decides to borrow two payday loans, they are to be taken from the different firms.

Collectors of financial fees should also operate in accordance with Indiana legislative acts. The rate exceeding 15% for one loan is forbidden to be charged in the State. In case a loan amount ranges from $401 to $500, the maximum fee should make up 10%. If it ranges from $251to $400, the fee is required to be up to 13%. Loans which sums are less than $251 are usually accompanied with the highest rate of 15%. Furthermore, a lender is allowed to charge just one insufficient funds fee which shouldn’t exceed $20. Payday lending companies can lodge no criminal suits against their debtors according to the Indiana legislation.

The repayment period of payday loans equals 14 days in Indiana. Generally payday loans’ rollovers are forbidden. On the other hand, a loan can be extended for three times in case a borrower isn’t able to pay a loan back on the due date. If a borrower still doesn’t have enough funds to pay for the loan after three extensions, he can ask for a repayment plan, even when it wasn’t originally agreed between the parties. Only if a week after 6 sequential payday loans has passed, a customer can borrow another loan.

There is a strict control over payday lending companies in Indiana. The legislators intend to avert law breaches from lenders and to secure the State citizens. Under the legislation, a payday lender who breaks the law can be put in jail and prohibited to operate in this sphere in future. Sometimes one violation is imposed with a fine of $1,000. If borrowers of Indiana have any questions about payday loans or complaints against local lenders, they can address to the Department of Financial Institutions, which is considered to be the main body settling such issues in the State