Indiana Code
Chapter 3. Loans
24-4.5-3-202. Permitted Additional Charges; Skip-a-Payment Services; Expedited Payment Services; Debt Cancellation Agreements; Insurance; Gap Agreements

Sec. 202. (1) In addition to the loan finance charge permitted by this chapter, a lender may contract for and receive the following additional charges in connection with a consumer loan:
(a) Official fees and taxes.
(b) Charges for insurance as described in subsection (2).
(c) Annual participation fees assessed in connection with a revolving loan account. Annual participation fees must:
(i) be reasonable in amount;
(ii) bear a reasonable relationship to the lender's costs to maintain and monitor the loan account; and
(iii) not be assessed for the purpose of circumvention or evasion of this article, as determined by the department.
(d) With respect to a debt secured by an interest in land, the following closing costs, if they are bona fide, reasonable in amount, and not for the purpose of circumvention or evasion of this article:
(i) Fees for title examination, abstract of title, title insurance, property surveys, or similar purposes.
(ii) Fees for preparing deeds, mortgages, and reconveyance, settlement, and similar documents.
(iii) Notary and credit report fees.
(iv) Amounts required to be paid into escrow or trustee accounts if the amounts would not otherwise be included in the loan finance charge.
(v) Appraisal fees.
(e) Notwithstanding provisions of the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) concerning disclosure, charges for other benefits, including insurance, conferred on the debtor, if the benefits are of value to the debtor and if the charges are reasonable in relation to the benefits, and are excluded as permissible additional charges from the loan finance charge. With respect to any other additional charge not specifically provided for in this section to be a permitted charge under this subsection, the creditor must submit a written explanation of the charge to the department indicating how the charge would be assessed and the value or benefit to the debtor. Supporting documents may be required by the department. The department shall determine whether the charge would be of benefit to the debtor and is reasonable in relation to the benefits.
(f) A charge not to exceed twenty-five dollars ($25) for each returned payment by a bank or other depository institution of a dishonored check, electronic funds transfer, negotiable order of withdrawal, or share draft issued by the debtor.
(g) With respect to a revolving loan account, a fee not to exceed twenty-five dollars ($25) in each billing cycle during which the balance due under the revolving loan account exceeds by more than one hundred dollars ($100) the maximum credit limit for the account established by the lender.
(h) With respect to a revolving loan account, a transaction fee that may not exceed the greater of the following:
(i) Two percent (2%) of the amount of the transaction.
(ii) Ten dollars ($10).
(i) A charge not to exceed twenty-five dollars ($25) for a skip-a-payment service, subject to the following:
(i) At the time of use of the service, the consumer must be given written notice of the amount of the charge and must acknowledge the amount in writing, including by electronic signature.
(ii) A charge for a skip-a-payment service may not be assessed with respect to a consumer loan subject to the provisions on rebate upon prepayment that are set forth in section 210 of this chapter.
(iii) A charge for a skip-a-payment service may not be assessed with respect to any payment for which a delinquency charge has been assessed under section 203.5 of this chapter.
(j) A charge not to exceed ten dollars ($10) for an optional expedited payment service, subject to the following:
(i) The charge may be assessed only upon request by the consumer to use the expedited payment service.
(ii) The amount of the charge must be disclosed to the consumer at the time of the consumer's request to use the expedited payment service.
(iii) The consumer must be informed that the consumer retains the option to make a payment by traditional means.
(iv) The charge may not be established in advance, through any agreement with the consumer, as the expected method of payment.
(v) The charge may not be assessed with respect to any payment for which a delinquency charge has been assessed under section 203.5 of this chapter.
(k) A charge for a GAP agreement, subject to subsection (3).
(l) With respect to consumer loans made by a person exempt from licensing under IC 24-4.5-3-502(1), a charge for a debt cancellation agreement, subject to the following:
(i) A debt cancellation agreement or debt cancellation coverage may not be required by the lender, and that fact must be disclosed in writing to the consumer.
(ii) The charge for the initial term of coverage under the debt cancellation agreement must be disclosed in writing to the consumer. The charge may be disclosed on a unit-cost basis only in the case of revolving loan accounts, closed-end credit transactions if the request for coverage is made by mail or telephone, and closed-end credit transactions if the debt cancellation agreement limits the total amount of indebtedness eligible for coverage.
(iii) If the term of coverage under the debt cancellation agreement is less than the term of the consumer loan, the term of coverage under the debt cancellation agreement must be disclosed in writing to the consumer.
(iv) The consumer must sign or initial an affirmative written request for coverage after receiving all required disclosures.
(v) If debt cancellation coverage for two (2) or more events is provided for in a single charge under a debt cancellation agreement, the entire charge may be excluded from the loan finance charge and imposed as an additional charge under this section if at least one (1) of the events is the loss of life, health, or income.
The additional charges provided for in subdivisions (f) through (j) are not subject to refund or rebate.
(2) An additional charge may be made for insurance in connection with the loan, other than insurance protecting the lender against the debtor's default or other credit loss:
(a) with respect to insurance against loss of or damage to property or against liability, if the lender furnishes a clear and specific statement in writing to the debtor, setting forth the cost of the insurance if obtained from or through the lender and stating that the debtor may choose the person, subject to the lender's reasonable approval, through whom the insurance is to be obtained; and
(b) with respect to consumer credit insurance providing life, accident, unemployment or other loss of income, or health coverage, if the insurance coverage is not a factor in the approval by the lender of the extension of credit and this fact is clearly disclosed in writing to the debtor, and if, in order to obtain the insurance in connection with the extension of credit, the debtor gives specific affirmative written indication of the desire to do so after written disclosure of the cost of the insurance.
(3) An additional charge may be made for a GAP agreement, subject to the following:
(a) A GAP agreement or GAP coverage may not be required by the lender, and that fact must be disclosed in writing to the consumer.
(b) The charge for the initial term of coverage under the GAP agreement must be disclosed in writing to the consumer. The charge may be disclosed on a unit-cost basis only in the case of the following transactions:
(i) Revolving loan accounts.
(ii) Closed-end credit transactions, if the request for coverage is made by mail or telephone.
(iii) Closed-end credit transactions, if the GAP agreement limits the total amount of indebtedness eligible for coverage.
(c) If the term of coverage under the GAP agreement is less than the term of the consumer loan, the term of coverage under the GAP agreement must be disclosed in writing to the consumer.
(d) The consumer must sign or initial an affirmative written request for coverage after receiving all required disclosures.
(e) The GAP agreement must include the following:
(i) In the case of GAP coverage for a new motor vehicle, the manufacturer's suggested retail price (MSRP) for the motor vehicle.
(ii) In the case of GAP coverage for a used motor vehicle, the average retail value for the motor vehicle, as determined by use of a third party valuation service provider that is customarily relied upon in the used motor vehicle commercial marketplace.
(iii) The name of the financing entity taking assignment of the agreement, as applicable.
(iv) The name and address of the consumer.
(v) The name of the lender selling the agreement.
(vi) Information advising the consumer that the consumer may be able to obtain similar coverage from the consumer's primary insurance carrier.
(vii) A coverage provision that includes a minimum deductible of five hundred dollars ($500).
(viii) A provision providing for a minimum thirty (30) day trial period.
(ix) In the case of a consumer loan made with respect to a motor vehicle, a provision excluding the sale of GAP coverage if the amount financed under the consumer loan (not including the cost of the GAP agreement, the cost of any credit insurance, and the cost of any warranties or service agreements) is less than eighty percent (80%) of the manufacturer's suggested retail price (MSRP), in the case of a new motor vehicle, or of the average retail value (as determined by use of a third party valuation service provider that is customarily relied upon in the used motor vehicle commercial marketplace), in the case of a used motor vehicle.
(x) In the case of a GAP agreement in which the charge for the agreement exceeds four hundred dollars ($400), specific instructions that may be used by the consumer to cancel the agreement and obtain a refund of the unearned GAP charge before prepayment in full, in accordance with the procedures, and subject to the conditions, set forth in subdivision (f).
(f) If the charge for the GAP agreement exceeds four hundred dollars ($400), the consumer is entitled to cancel the agreement and obtain a refund of the unearned GAP charge before prepayment in full. Refunds of unearned GAP charges shall be made subject to the following conditions:
(i) A refund of the charge for a GAP agreement must be calculated using a method that is no less favorable to the consumer than a refund calculated on a pro rata basis.
(ii) The consumer is entitled to a refund of the unearned GAP agreement charge as outlined in the GAP agreement.
(iii) The seller of the GAP agreement, or the seller's assignee, is responsible for making a timely refund to the consumer of unearned GAP agreement charges under the terms and conditions of the GAP agreement.
(g) Upon prepayment in full of the consumer loan:
(i) the GAP coverage is automatically terminated; and
(ii) the seller of the GAP agreement must issue a refund in accordance with subdivision (f).
(h) A lender that sells GAP agreements must:
(i) insure its GAP agreement obligations under a contractual liability insurance policy issued by an insurer authorized to engage in the insurance business in Indiana; and
(ii) retain appropriate records, as required under this article, regarding GAP agreements sold, refunded, and expired.
(4) As used in this section, "debt cancellation agreement" means an agreement that provides coverage for payment or satisfaction of all or part of a debt in the event of the loss of life, health, or income. The term does not include a GAP agreement.
(5) As used in this section, "expedited payment service" means a service offered to a consumer to ensure that a payment made by the consumer with respect to a consumer loan will be reflected as paid and posted on an expedited basis.
(6) As used in this section:
(a) "guaranteed asset protection agreement";
(b) "guaranteed auto protection agreement"; or
(c) "GAP agreement";
means, with respect to consumer loans involving motor vehicles or other titled assets, an agreement in which the lender agrees to cancel or waive all or part of the outstanding debt after all property insurance benefits have been exhausted after the occurrence of a specified event.
(7) As used in this section, "skip-a-payment service" means a service that:
(a) is offered by a lender to a consumer; and
(b) permits the consumer to miss or skip a payment due under a consumer loan without resulting in default.
Formerly: Acts 1971, P.L.366, SEC.4; Acts 1975, P.L.266, SEC.1. As amended by P.L.247-1983, SEC.16; P.L.139-1990, SEC.1; P.L.181-1991, SEC.3; P.L.14-1992, SEC.26; P.L.122-1994, SEC.19; P.L.45-1995, SEC.9; P.L.80-1998, SEC.6; P.L.213-2007, SEC.8; P.L.217-2007, SEC.7; P.L.153-2016, SEC.5; P.L.159-2017, SEC.11; P.L.69-2018, SEC.17; P.L.176-2019, SEC.16; P.L.211-2019, SEC.32; P.L.280-2019, SEC.2; P.L.29-2022, SEC.5.

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