Indiana Code
Chapter 3. Loans
24-4.5-3-201. Loan Finance Charge for Consumer Loans Other Than Supervised Loans; Loan Agreements Entered Into After June 30, 2020; Precomputed Consumer Loans Prohibited; Nonrefundable Prepaid Finance Charge; Subterfuge by Lender; Applicability of Cr...

Sec. 201. Loan Finance Charge for Consumer Loans other than Supervised Loans—(1) This section does not apply to a supervised loan (as defined in section 501 of this chapter). Except as provided in subsections (7) and (9), with respect to a consumer loan, a lender may contract for a loan finance charge, calculated according to the actuarial method, not exceeding twenty-five percent (25%) per year on the unpaid balances of the principal (as defined in section 107(3) of this chapter).
(2) In the case of a loan agreement entered into before July 1, 2020, this section does not limit or restrict the manner of contracting for the loan finance charge, whether by way of add-on, discount, or otherwise, so long as the rate of the loan finance charge does not exceed that permitted by this section. If the loan is precomputed:
(a) the loan finance charge may be calculated on the assumption that all scheduled payments will be made when due; and
(b) the effect of prepayment is governed by the provisions on rebate upon prepayment in section 210 of this chapter.
(3) The following apply to a loan agreement for a consumer loan (or for the refinancing or consolidation of a consumer loan) that is entered into after June 30, 2020:
(a) The consumer loan is subject to this section, including the limitations set forth in:
(i) subsection (1) with respect to the loan finance charge; and
(ii) subsection (9)(b) with respect to the amount of the authorized nonrefundable prepaid finance charge, in the case of a consumer loan that is not secured by an interest in land.
(b) The loan finance charge authorized by this section must be:
(i) contracted for between the lender and the debtor; and
(ii) calculated by applying a rate not exceeding the rate set forth in subsection (1) to unpaid balances of the principal (as defined in section 107(3) of this chapter).
(c) A loan agreement for a precomputed consumer loan is prohibited.
(d) Subject to subsection (12), in addition to the loan finance charge authorized by subsection (1) and to any other fees permitted by this chapter, and not subject to the twenty-five percent (25%) rate set forth in subsection (1), the lender may contract for and receive as a condition for, or an incident to, the extension of credit a nonrefundable prepaid finance charge under subsection (9), whether the charge is:
(i) paid separately in cash or by check before or at consummation; or
(ii) withheld from the proceeds of the consumer loan.
(4) For the purposes of this section, the term of a loan commences with the date the loan is made. Differences in the lengths of months are disregarded, and a day may be counted as one-thirtieth (1/30) of a month. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen (15) days may be treated as a full month if periods of fifteen (15) days or less are disregarded and if that procedure is not consistently used to obtain a greater yield than would otherwise be permitted. For purposes of computing average daily balances, the creditor may elect to treat all months as consisting of thirty (30) days.
(5) With respect to a consumer loan made pursuant to a revolving loan account:
(a) the loan finance charge shall be deemed not to exceed the maximum annual percentage rate if the loan finance charge contracted for and received does not exceed a charge in each monthly billing cycle which is two and eighty-three thousandths percent (2.083%) of an amount not greater than:
(i) the average daily balance of the debt;
(ii) the unpaid balance of the debt on the same day of the billing cycle; or
(iii) subject to subsection (6), the median amount within a specified range within which the average daily balance or the unpaid balance of the debt, on the same day of the billing cycle, is included; for the purposes of this clause and clause (ii), a variation of not more than four (4) days from month to month is "the same day of the billing cycle";
(b) if the billing cycle is not monthly, the loan finance charge shall be deemed not to exceed the maximum annual percentage rate if the loan finance charge contracted for and received does not exceed a percentage which bears the same relation to one-twelfth (1/12) the maximum annual percentage rate as the number of days in the billing cycle bears to thirty (30); and
(c) notwithstanding subsection (1), if there is an unpaid balance on the date as of which the loan finance charge is applied, the lender may contract for and receive a charge not exceeding fifty cents ($0.50) if the billing cycle is monthly or longer, or the pro rata part of fifty cents ($0.50) which bears the same relation to fifty cents ($0.50) as the number of days in the billing cycle bears to thirty (30) if the billing cycle is shorter than monthly, but no charge may be made pursuant to this subdivision if the lender has made an annual charge for the same period as permitted by the provisions on additional charges in section 202(1)(c) of this chapter.
(6) Subject to classifications and differentiations the lender may reasonably establish, the lender may make the same loan finance charge on all amounts financed within a specified range. A loan finance charge does not violate subsection (1) if:
(a) when applied to the median amount within each range, it does not exceed the maximum permitted by subsection (1); and
(b) when applied to the lowest amount within each range, it does not produce a rate of loan finance charge exceeding the rate calculated according to subdivision (a) by more than eight percent (8%) of the rate calculated according to subdivision (a).
(7) With respect to a consumer loan not made pursuant to a revolving loan account, the lender may contract for and receive a minimum loan finance charge of not more than thirty dollars ($30). The minimum loan finance charge allowed under this subsection may be imposed only if the lender does not contract for or receive a nonrefundable prepaid finance charge under subsection (9) and:
(a) the debtor prepays in full a consumer loan, refinancing, or consolidation, regardless of whether the loan, refinancing, or consolidation is precomputed;
(b) the loan, refinancing, or consolidation prepaid by the debtor is subject to a loan finance charge that:
(i) is contracted for by the parties; and
(ii) does not exceed the rate prescribed in subsection (1); and
(c) the loan finance charge earned at the time of prepayment is less than the minimum loan finance charge contracted for under this subsection.
(8) The amount of thirty dollars ($30) in subsection (7) is subject to change under the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the Reference Base Index to be used under this subsection is the Index for October 1992.
(9) Except as provided in subsection (7), and subject to subsection (12), in addition to the loan finance charge authorized by subsection (1) and to any other charges and fees permitted by this chapter, a lender may contract for and receive a nonrefundable prepaid finance charge of not more than the following:
(a) In the case of a consumer loan that is secured by an interest in land and that:
(i) is not made under a revolving loan account, two percent (2%) of the loan amount; or
(ii) is made under a revolving loan account, two percent (2%) of the line of credit.
(b) In the case of consumer loan that is not secured by an interest in land, fifty dollars ($50) if the loan agreement is entered into before July 1, 2020. If the loan agreement is entered into after June 30, 2020, not more than the following:
(i) Seventy-five dollars ($75), in the case of a loan agreement for a principal amount which is two thousand dollars ($2,000) or less.
(ii) One hundred fifty dollars ($150) in the case of a loan agreement for a principal amount which is more than two thousand dollars ($2,000) but does not exceed four thousand dollars ($4,000).
(iii) Two hundred dollars ($200) in the case of a loan agreement for a principal amount which is more than four thousand dollars ($4,000).
The amounts in this subsection are not subject to change under IC 24-4.5-1-106.
(10) The nonrefundable prepaid finance charge provided for in subsection (9) is not subject to refund or rebate. However, for any loan entered into after June 30, 2020, any amount charged by the lender, other than by a lender that is a depository institution (as defined in IC 24-4.5-1-301.5(12)), under subsection (9) that exceeds the applicable amount permitted by subsection (9)(b) constitutes a violation of this article under IC 24-4.5-6-107.5(l) and is subject to refund. Any amount charged by a depository institution (as defined in IC 24-4.5-1-301.5(12)) under subsection (9) that exceeds the applicable amount set forth in subsection (9)(b) is subject to refund.
(11) If the director determines that a lender's accrual method of accounting as applied to a consumer loan under this section involves the application of subterfuge for the purpose of circumventing this chapter, the director may conform the loan finance charge and fees for the transaction to the limitations set forth in this section and may require a refund of overcharges under IC 24-4.5-6-106(2)(a). A determination by the director under this subsection:
(a) must be in writing;
(b) shall be delivered to all parties in the transaction; and
(c) is subject to IC 4-21.5-3.
(12) At the time of consummation of a consumer loan:
(a) the loan finance charge authorized by subsection (1); and
(b) the nonrefundable prepaid finance charge authorized by subsection (9) (including any amount charged by a depository institution (as defined in IC 24-4.5-1-301.5(12)) that exceeds the applicable amount set forth in subsection (9)(b));
are subject to IC 35-45-7 and, when combined, may not exceed the rate set forth in IC 35-45-7-2.
(13) Notwithstanding subsections (9) and (10), in the case of a consumer loan that is not secured by an interest in land, if a lender retains any part of a nonrefundable prepaid finance charge charged on a loan that is paid in full by a new loan from the same lender, the following apply:
(a) If the loan is paid in full by the new loan within three (3) months after the date of the prior loan, the lender may not charge a nonrefundable prepaid finance charge on the new loan, or, in the case of a revolving loan, on the increased credit line.
(b) The lender may not assess more than two (2) nonrefundable prepaid finance charges in any twelve (12) month period.
(c) Subject to subdivisions (a) and (b), if a loan that is entered into by a lender and a debtor before July 1, 2020, is paid in full by a new loan from the same lender after June 30, 2020, the lender may contract for and receive a nonrefundable prepaid finance charge in the amount set forth in subsection (9)(b) for loan agreements entered into after June 30, 2020.
(14) In the case of a consumer loan that is secured by an interest in land, this section does not prohibit a lender from contracting for and receiving a fee for preparing deeds, mortgages, reconveyances, and similar documents under section 202(1)(d)(ii) of this chapter, in addition to the nonrefundable prepaid finance charge provided for in subsection (9).
Formerly: Acts 1971, P.L.366, SEC.4. As amended by Acts 1982, P.L.150, SEC.3; P.L.14-1992, SEC.25; P.L.122-1994, SEC.18; P.L.45-1995, SEC.8; P.L.163-1999, SEC.1; P.L.10-2006, SEC.5 and P.L.57-2006, SEC.5; P.L.145-2008, SEC.26; P.L.91-2013, SEC.2; P.L.159-2017, SEC.10; P.L.85-2020, SEC.10; P.L.29-2022, SEC.4.

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