Introduced Version
SENATE BILL No. 352
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 24-4.5; IC 28-7-5-28; IC 35-45-7-2.
Synopsis: Supervised consumer loans. Amends the Uniform
Consumer Credit Code to provide that the authorized loan finance
charge for a consumer loan, other than a supervised loan, that is
entered into after June 30, 2022, may not exceed 36% (versus 25% for
a consumer loan that is entered into before July 1, 2022) per year on the
unpaid balances of the principal. Amends the definition of "supervised
loan" to mean a consumer loan that: (1) is entered into before July 1,
2022, and with respect to which the rate of the loan finance charge
exceeds the authorized 25% annual rate for consumer loans under
current law; or (2) is entered into after June 30, 2022, and is made in
accordance with the requirements for supervised loans set forth in the
bill. Sets forth requirements and limitations with respect to the
following for supervised loans made after June 30, 2022: (1)
Authorized fees and charges. (2) The maximum principal amount. (3)
The minimum and maximum lengths of the loan term. (4) Information
and disclosures to be included in the loan contract. (5) A borrower's
right to rescind a supervised loan transaction. Provides that when a
borrower enters into a supervised loan, the lender shall provide the
borrower with a pamphlet approved by the department of financial
institutions (department) that describes: (1) the availability of debt
management and credit counseling services; (2) the borrower's rights
and responsibilities; and (3) the availability of the 211 telephone
dialing code for human services information and referrals. Sets forth
prohibited acts and practices in connection with a supervised loan.
Provides that a lender may not take a security interest in real or
personal property in connection with a supervised loan, other than a
(Continued next page)
Effective: July 1, 2022.
Zay
January 11, 2022, read first time and referred to Committee on Insurance and Financial
Institutions.
2022 IN 352—LS 6946/DI 101 Digest Continued
security interest in a personal check of the borrower. Specifies the
applicability of the bill's provisions to supervised loans made by
persons exempt from: (1) the bill's finance charge limitations; and (2)
licensure by the department. Requires a lender that makes at least one
supervised loan in Indiana during a calendar year to remit to the
department: (1) an annual fee of $250; and (2) an additional fee of
$250 per Indiana branch location (after the first location). Establishes
the consumer financial education fund (fund), and provides that the
annual fees collected from lenders making supervised loans are to be
deposited in the fund. Provides that the fund is to be: (1) administered
by the department; and (2) used by the department for paying expenses
relating to consumer financial education. Requires a person that enters
into at least one supervised loan transaction in Indiana in any calendar
year to file with the department a report concerning the person's
business and operations with respect to that calendar year. Requires the
director of the department to prescribe: (1) the time and manner for
filing the report; and (2) the information to be included in the report.
Requires the department to publish and make available to the public,
at least annually, an analysis of the information provided in the reports
filed with the department. Sets forth the information that must be
included in the department's analysis. Makes conforming amendments
to existing references to supervised loans throughout the Indiana Code.
2022 IN 352—LS 6946/DI 1012022 IN 352—LS 6946/DI 101 Introduced
Second Regular Session of the 122nd General Assembly (2022)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2021 Regular Session of the General Assembly.
SENATE BILL No. 352
A BILL FOR AN ACT to amend the Indiana Code concerning trade
regulation and to make an appropriation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 24-4.5-3-109 IS AMENDED TO READ AS
2 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 109. (1) "Loan finance
3 charge" means the sum of:
4 (a) all charges payable directly or indirectly by the debtor and
5 imposed directly or indirectly by the lender as an incident to the
6 extension of credit, including any of the following types of
7 charges which are applicable: interest or any amount payable
8 under a point, discount, or other system of charges, however
9 denominated, premium or other charge for any guarantee or
10 insurance protecting the lender against the debtor's default or
11 other credit loss; and
12 (b) charges incurred for investigating the collateral or
13 credit-worthiness of the debtor.
14 The term does not include charges as a result of default, additional
15 charges (IC 24-4.5-3-202), delinquency charges (IC 24-4.5-3-203.5),
2022 IN 352—LS 6946/DI 101 2
1 or deferral charges (IC 24-4.5-3-204). With respect to a supervised
2 loan made under section 508.1 of this chapter after June 30, 2022,
3 the term does not include the fees and charges set forth in section
4 508.1(2)(b) through section 508.1(2)(e) of this chapter. The term
5 does not include charges paid or payable to a third party that are not
6 required by the lender as a condition or incident to the extension of
7 credit except for borrower paid mortgage broker fees, including fees
8 paid directly to the broker or the lender (for delivery to the broker),
9 whether the fees are paid in cash or financed. However, borrower paid
10 mortgage broker fees do not include fees paid to a mortgage broker by
11 a creditor, including yield spread premiums and service release fees.
12 (2) If a lender makes a loan to a debtor by purchasing or satisfying
13 obligations of the debtor pursuant to a lender credit card or similar
14 arrangement, and the purchase or satisfaction is made at less than the
15 face amount of the obligation, the discount is not part of the loan
16 finance charge.
17 SECTION 2. IC 24-4.5-3-201, AS AMENDED BY P.L.85-2020,
18 SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
19 JULY 1, 2022]: Sec. 201. Loan Finance Charge for Consumer Loans
20 other than Supervised Loans—(1) Except as provided in subsections
21 (7) and (9), with respect to a consumer loan, other than a supervised
22 loan (as defined in section 501 of this chapter), a lender may contract
23 for a loan finance charge, calculated according to the actuarial method,
24 not exceeding the following:
25 (a) Twenty-five percent (25%) per year on the unpaid balances of
26 the principal (as defined in section 107(3) of this chapter), in the
27 case of a loan agreement entered into before July 1, 2022.
28 (b) Subject to subsection (3), thirty-six percent (36%) per year
29 on the unpaid balances of the principal (as defined in section
30 107(3) of this chapter), in the case of a loan agreement entered
31 into after June 30, 2022.
32 (2) In the case of a loan agreement entered into before July 1, 2020,
33 this section does not limit or restrict the manner of contracting for the
34 loan finance charge, whether by way of add-on, discount, or otherwise,
35 so long as the rate of the loan finance charge does not exceed that
36 permitted by this section. If the loan is precomputed:
37 (a) the loan finance charge may be calculated on the assumption
38 that all scheduled payments will be made when due; and
39 (b) the effect of prepayment is governed by the provisions on
40 rebate upon prepayment in section 210 of this chapter.
41 (3) The following apply to a loan agreement for a consumer loan (or
42 for the refinancing or consolidation of a consumer loan) that is entered
2022 IN 352—LS 6946/DI 101 3
1 into after June 30, 2020:
2 (a) The consumer loan is subject to this section, including the
3 limitations set forth in:
4 (i) subsection (1) with respect to the loan finance charge; and
5 (ii) subsection (9)(b) with respect to the amount of the
6 authorized nonrefundable prepaid finance charge, in the case
7 of a consumer loan that is not secured by an interest in land.
8 (b) The loan finance charge authorized by this section must be:
9 (i) contracted for between the lender and the debtor; and
10 (ii) calculated by applying a rate not exceeding the rate set
11 forth in subsection (1) to unpaid balances of the principal (as
12 defined in section 107(3) of this chapter).
13 (c) A loan agreement for a precomputed consumer loan is
14 prohibited, other than in the case of a supervised loan made
15 under section 508.1 of this chapter after June 30, 2022.
16 (d) Subject to subsection (12), in addition to the loan finance
17 charge authorized by subsection (1) and to any other fees
18 permitted by this chapter, and not subject to the twenty-five
19 percent (25%) applicable rate set forth in subsection (1), the
20 lender may contract for and receive as a condition for, or an
21 incident to, the extension of credit a nonrefundable prepaid
22 finance charge under subsection (9), whether the charge is:
23 (i) paid separately in cash or by check before or at
24 consummation; or
25 (ii) withheld from the proceeds of the consumer loan.
26 (4) For the purposes of this section, the term of a loan commences
27 with the date the loan is made. Differences in the lengths of months are
28 disregarded, and a day may be counted as one-thirtieth (1/30) of a
29 month. Subject to classifications and differentiations the lender may
30 reasonably establish, a part of a month in excess of fifteen (15) days
31 may be treated as a full month if periods of fifteen (15) days or less are
32 disregarded and if that procedure is not consistently used to obtain a
33 greater yield than would otherwise be permitted. For purposes of
34 computing average daily balances, the creditor may elect to treat all
35 months as consisting of thirty (30) days.
36 (5) With respect to a consumer loan made pursuant to a revolving
37 loan account:
38 (a) the loan finance charge shall be deemed not to exceed the
39 maximum annual percentage rate if the loan finance charge
40 contracted for and received does not exceed a charge in each
41 monthly billing cycle which is either two and eighty-three
42 thousandths percent (2.083%), in the case of a loan agreement
2022 IN 352—LS 6946/DI 101 4
1 described in subsection (1)(a), or three percent (3%), in the
2 case of a loan agreement described in subsection (1)(b), of an
3 amount not greater than:
4 (i) the average daily balance of the debt;
5 (ii) the unpaid balance of the debt on the same day of the
6 billing cycle; or
7 (iii) subject to subsection (6), the median amount within a
8 specified range within which the average daily balance or the
9 unpaid balance of the debt, on the same day of the billing
10 cycle, is included; for the purposes of this clause and clause
11 (ii), a variation of not more than four (4) days from month to
12 month is "the same day of the billing cycle";
13 (b) if the billing cycle is not monthly, the loan finance charge
14 shall be deemed not to exceed the maximum annual percentage
15 rate if the loan finance charge contracted for and received does
16 not exceed a percentage which bears the same relation to
17 one-twelfth (1/12) the maximum annual percentage rate as the
18 number of days in the billing cycle bears to thirty (30); and
19 (c) notwithstanding subsection (1), if there is an unpaid balance
20 on the date as of which the loan finance charge is applied, the
21 lender may contract for and receive a charge not exceeding fifty
22 cents ($0.50) if the billing cycle is monthly or longer, or the pro
23 rata part of fifty cents ($0.50) which bears the same relation to
24 fifty cents ($0.50) as the number of days in the billing cycle bears
25 to thirty (30) if the billing cycle is shorter than monthly, but no
26 charge may be made pursuant to this subdivision if the lender has
27 made an annual charge for the same period as permitted by the
28 provisions on additional charges in section 202(1)(c) of this
29 chapter.
30 (6) Subject to classifications and differentiations the lender may
31 reasonably establish, the lender may make the same loan finance
32 charge on all amounts financed within a specified range. A loan finance
33 charge does not violate subsection (1) if:
34 (a) when applied to the median amount within each range, it does
35 not exceed the maximum permitted by subsection (1); and
36 (b) when applied to the lowest amount within each range, it does
37 not produce a rate of loan finance charge exceeding the rate
38 calculated according to subdivision (a) by more than eight percent
39 (8%) of the rate calculated according to subdivision (a).
40 (7) With respect to a consumer loan not made pursuant to a
41 revolving loan account, the lender may contract for and receive a
42 minimum loan finance charge of not more than thirty dollars ($30). The
2022 IN 352—LS 6946/DI 101 5
1 minimum loan finance charge allowed under this subsection may be
2 imposed only if the lender does not contract for or receive a
3 nonrefundable prepaid finance charge under subsection (9) and:
4 (a) the debtor prepays in full a consumer loan, refinancing, or
5 consolidation, regardless of whether the loan, refinancing, or
6 consolidation is precomputed;
7 (b) the loan, refinancing, or consolidation prepaid by the debtor
8 is subject to a loan finance charge that:
9 (i) is contracted for by the parties; and
10 (ii) does not exceed the rate prescribed in subsection (1); and
11 (c) the loan finance charge earned at the time of prepayment is
12 less than the minimum loan finance charge contracted for under
13 this subsection.
14 (8) The amount of thirty dollars ($30) in subsection (7) is subject to
15 change under the provisions on adjustment of dollar amounts (IC
16 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the
17 Reference Base Index to be used under this subsection is the Index for
18 October 1992.
19 (9) Except as provided in subsection (7), and subject to subsection
20 (12), in addition to the loan finance charge authorized by subsection (1)
21 and to any other charges and fees permitted by this chapter, a lender
22 may contract for and receive a nonrefundable prepaid finance charge
23 of not more than the following:
24 (a) In the case of a consumer loan that is secured by an interest in
25 land and that:
26 (i) is not made under a revolving loan account, two percent
27 (2%) of the loan amount; or
28 (ii) is made under a revolving loan account, two percent (2%)
29 of the line of credit.
30 (b) In the case of consumer loan that is not secured by an interest
31 in land, fifty dollars ($50) if the loan agreement is entered into
32 before July 1, 2020. If the loan agreement is entered into after
33 June 30, 2020, not more than the following:
34 (i) Seventy-five dollars ($75), in the case of a loan agreement
35 for a principal amount which is two thousand dollars ($2,000)
36 or less.
37 (ii) One hundred fifty dollars ($150) in the case of a loan
38 agreement for a principal amount which is more than two
39 thousand dollars ($2,000) but does not exceed four thousand
40 dollars ($4,000).
41 (iii) Two hundred dollars ($200) in the case of a loan
42 agreement for a principal amount which is more than four
2022 IN 352—LS 6946/DI 101 6
1 thousand dollars ($4,000).
2 The amounts in this subsection are not subject to change under
3 IC 24-4.5-1-106.
4 (10) The nonrefundable prepaid finance charge provided for in
5 subsection (9) is not subject to refund or rebate. However, for any loan
6 entered into after June 30, 2020, any amount charged by the lender,
7 other than by a lender that is a depository institution (as defined in
8 IC 24-4.5-1-301.5(12)), under subsection (9) that exceeds the
9 applicable amount permitted by subsection (9)(b) constitutes a
10 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
11 refund. Any amount charged by a depository institution (as defined in
12 IC 24-4.5-1-301.5(12)) under subsection (9) that exceeds the applicable
13 amount set forth in subsection (9)(b) is subject to refund.
14 (11) If the director determines that a lender's accrual method of
15 accounting as applied to a consumer loan under this section involves
16 the application of subterfuge for the purpose of circumventing this
17 chapter, the director may conform the loan finance charge and fees for
18 the transaction to the limitations set forth in this section and may
19 require a refund of overcharges under IC 24-4.5-6-106(2)(a). A
20 determination by the director under this subsection:
21 (a) must be in writing;
22 (b) shall be delivered to all parties in the transaction; and
23 (c) is subject to IC 4-21.5-3.
24 (12) At the time of consummation of a consumer loan:
25 (a) the loan finance charge authorized by subsection (1); and
26 (b) the nonrefundable prepaid finance charge authorized by
27 subsection (9) (including any amount charged by a depository
28 institution (as defined in IC 24-4.5-1-301.5(12)) that exceeds the
29 applicable amount set forth in subsection (9)(b));
30 are subject to IC 35-45-7 and, when combined, may not exceed the rate
31 set forth in IC 35-45-7-2.
32 (13) Notwithstanding subsections (9) and (10), in the case of a
33 consumer loan that is not secured by an interest in land, if a lender
34 retains any part of a nonrefundable prepaid finance charge charged on
35 a loan that is paid in full by a new loan from the same lender, the
36 following apply:
37 (a) If the loan is paid in full by the new loan within three (3)
38 months after the date of the prior loan, the lender may not charge
39 a nonrefundable prepaid finance charge on the new loan, or, in the
40 case of a revolving loan, on the increased credit line.
41 (b) The lender may not assess more than two (2) nonrefundable
42 prepaid finance charges in any twelve (12) month period.
2022 IN 352—LS 6946/DI 101 7
1 (c) Subject to subdivisions (a) and (b), if a loan that is entered
2 into by a lender and a debtor before July 1, 2020, is paid in full by
3 a new loan from the same lender after June 30, 2020, the lender
4 may contract for and receive a nonrefundable prepaid finance
5 charge in the amount set forth in subsection (9)(b) for loan
6 agreements entered into after June 30, 2020.
7 (14) In the case of a consumer loan that is secured by an interest in
8 land, this section does not prohibit a lender from contracting for and
9 receiving a fee for preparing deeds, mortgages, reconveyances, and
10 similar documents under section 202(1)(d)(ii) of this chapter, in
11 addition to the nonrefundable prepaid finance charge provided for in
12 subsection (9).
13 SECTION 3. IC 24-4.5-3-203.5, AS AMENDED BY P.L.129-2020,
14 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
15 JULY 1, 2022]: Sec. 203.5. Delinquency Charges — (1) With respect
16 to a consumer loan, refinancing, or consolidation, the parties may
17 contract for a delinquency charge of not more than the following:
18 (a) Five dollars ($5) on any installment or minimum payment due
19 that is not paid in full not later than ten (10) days after its
20 scheduled due date, in the case of a consumer loan, refinancing,
21 or consolidation that is made before July 1, 2019. The amount of
22 five dollars ($5) in this subdivision is subject to change under
23 IC 24-4.5-1-106. In addition, the parties may provide by contract
24 for a delinquency charge that is subject to change. If the parties
25 provide by contract for a delinquency charge that is subject to
26 change, the lender shall disclose in the contract that the amount
27 of the delinquency charge is subject to change under
28 IC 24-4.5-1-106 or this section.
29 (b) In the case of a consumer loan, refinancing, or consolidation
30 that is made after June 30, 2019, the following:
31 (i) Five dollars ($5) on any installment or minimum payment
32 due that is not paid in full not later than ten (10) days after its
33 scheduled due date, if installments under the consumer loan,
34 refinancing, or consolidation are due every fourteen (14) days
35 or less. The amount of five dollars ($5) in this clause is not
36 subject to change under IC 24-4.5-1-106.
37 (ii) Twenty-five dollars ($25) on any installment or minimum
38 payment due that is not paid in full not later than ten (10) days
39 after its scheduled due date, if installments under the
40 consumer loan, refinancing, or consolidation are due every
41 fifteen (15) days or more. The amount of twenty-five dollars
42 ($25) in this clause is not subject to change under
2022 IN 352—LS 6946/DI 101 8
1 IC 24-4.5-1-106.
2 (iii) Twenty-five dollars ($25) on any installment or minimum
3 payment due that is not paid in full not later than ten (10) days
4 after its scheduled due date, in the case of a consumer loan,
5 refinancing, or consolidation that is payable in a single
6 installment that is due at least thirty (30) days after the
7 consumer loan, refinancing, or consolidation is made. The
8 amount of twenty-five dollars ($25) in this clause is not
9 subject to change under IC 24-4.5-1-106.
10 (2) A delinquency charge under this section may be collected only
11 once on an installment however long it remains in default. With regard
12 to a delinquency charge on consumer loans made under a revolving
13 loan account, the delinquency charge may be applied each month that
14 the payment is less than the minimum required payment on the
15 account. A delinquency charge may be collected any time after it
16 accrues. A delinquency charge may not be collected if:
17 (a) the installment has been deferred and a deferral charge (IC
18 24-4.5-3-204) has been paid or incurred;
19 (b) a charge for a skip-a-payment service under
20 IC 24-4.5-3-202(1)(i) has been paid or incurred, as provided in
21 IC 24-4.5-3-202(1)(i)(iii); or
22 (c) a charge for an optional expedited payment service under
23 IC 24-4.5-3-202(1)(j) has been paid or incurred, as provided in
24 IC 24-4.5-3-202(1)(j)(v).
25 (3) A creditor may not, directly or indirectly, charge or collect a
26 delinquency charge on a payment that:
27 (a) is paid not later than ten (10) days after its scheduled due date;
28 and
29 (b) is otherwise a full payment of the payment due for the
30 applicable installment period;
31 if the only delinquency with respect to the consumer loan, refinancing,
32 or consolidation is attributable to a delinquency charge assessed on an
33 earlier installment.
34 (4) This subsection does not apply to a supervised loan made
35 under section 508.1 of this chapter after June 30, 2022. If two (2) or
36 more installments, or parts of two (2) or more installments, of a
37 precomputed loan are in default for ten (10) days or more, the lender
38 may elect to convert the loan from a precomputed loan to a loan in
39 which the finance charge is based on unpaid balances. A lender that
40 makes this election shall make a rebate under the provisions on rebates
41 upon prepayment (IC 24-4.5-3-210) as of the maturity date of the first
42 delinquent installment, and thereafter may make a loan finance charge
2022 IN 352—LS 6946/DI 101 9
1 as authorized by the provisions on loan finance charges for consumer
2 loans (IC 24-4.5-3-201) or, in the case of supervised loans made
3 before July 1, 2022, supervised loans (IC 24-4.5-3-508). The amount
4 of the rebate shall not be reduced by the amount of any permitted
5 minimum charge (IC 24-4.5-3-210). Any deferral charges made on
6 installments due at or after the maturity date of the first delinquent
7 installment shall be rebated, and no further deferral charges shall be
8 made.
9 SECTION 4. IC 24-4.5-3-205, AS AMENDED BY P.L.85-2020,
10 SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
11 JULY 1, 2022]: Sec. 205. Loan Finance Charge on Refinancing —
12 With respect to a consumer loan, refinancing, or consolidation, the
13 lender may by agreement with the debtor refinance the unpaid balance
14 and may contract for and receive a loan finance charge based on the
15 principal resulting from the refinancing at a rate not exceeding that
16 permitted by the provisions on a loan finance charge for consumer
17 loans (IC 24-4.5-3-201) or the provisions on a loan finance charge for
18 supervised loans (IC 24-4.5-3-508), (section 508 of this chapter, for
19 supervised loans made before July 1, 2022, or section 508.1 of this
20 chapter, for supervised loans made after June 30, 2022), whichever
21 is appropriate. For the purpose of determining the loan finance charge
22 permitted, the principal resulting from the refinancing comprises the
23 following:
24 (a) If:
25 (i) the transaction was not precomputed, the total of the unpaid
26 balance and the accrued charges on the date of the refinancing;
27 or
28 (ii) the transaction was precomputed in the case of a
29 transaction and was entered into before July 1, 2020, or if the
30 transaction was for a supervised loan made under section
31 508.1 of this chapter after June 30, 2022, the amount which
32 the debtor would have been required to pay upon prepayment
33 pursuant to the provisions on rebate upon prepayment (IC
34 24-4.5-3-210) (section 210 of this chapter) on the date of
35 refinancing.
36 (b) Appropriate additional charges (IC 24-4.5-3-202), payment of
37 which is deferred.
38 SECTION 5. IC 24-4.5-3-206, AS AMENDED BY P.L.85-2020,
39 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
40 JULY 1, 2022]: Sec. 206. Loan Finance Charge on Consolidation —
41 (1) If a debtor owes an unpaid balance to a lender with respect to a
42 consumer loan, refinancing, or consolidation, and becomes obligated
2022 IN 352—LS 6946/DI 101 10
1 on another consumer loan, refinancing, or consolidation with the same
2 lender, the parties may agree to a consolidation resulting in a single
3 schedule of payments. If the previous consumer loan, refinancing, or
4 consolidation was not precomputed, the parties may agree to add the
5 unpaid amount of principal and accrued charges on the date of
6 consolidation to the principal with respect to the subsequent loan. If the
7 previous consumer loan, refinancing, or consolidation was
8 precomputed in the case of a transaction and was entered into before
9 July 1, 2020, or if the previous transaction was made under section
10 508.1 of this chapter after June 30, 2022, the parties may agree to
11 refinance the unpaid balance pursuant to the provisions on refinancing
12 (IC 24-4.5-3-205) and to consolidate the principal resulting from the
13 refinancing by adding it to the principal with respect to the subsequent
14 loan. In either case the lender may contract for and receive a loan
15 finance charge based on the aggregate principal resulting from the
16 consolidation at a rate not in excess of that permitted by the provisions
17 on loan finance charge for consumer loans (IC 24-4.5-3-201) or the
18 provisions on loan finance charge for supervised loans (IC
19 24-4.5-3-508), (section 508 of this chapter, for supervised loans
20 made before July 1, 2022, or section 508.1 of this chapter, for
21 supervised loans made after June 30, 2022), whichever is
22 appropriate.
23 (2) The parties may agree to consolidate the unpaid balance of a
24 consumer loan with the unpaid balance of a consumer credit sale. The
25 parties may agree to refinance the previous unpaid balance pursuant to
26 the provisions on refinancing sales (IC 24-4.5-2-205) or the provisions
27 on refinancing loans (IC 24-4.5-3-205), whichever is appropriate, and
28 to consolidate the amount financed resulting from the refinancing or
29 the principal resulting from the refinancing by adding it to the amount
30 financed or principal with respect to the subsequent sale or loan. The
31 aggregate amount resulting from the consolidation shall be deemed
32 principal, and the creditor may contract for and receive a loan finance
33 charge based on the principal at a rate not in excess of that permitted
34 by the provisions on loan finance charge for consumer loans (IC
35 24-4.5-3-201) or the provisions on loan finance charge for supervised
36 loans (IC 24-4.5-3-508), (section 508 of this chapter, for supervised
37 loans made before July 1, 2022, or section 508.1 of this chapter, for
38 supervised loans made after June 30, 2022), whichever is
39 appropriate.
40 SECTION 6. IC 24-4.5-3-208 IS AMENDED TO READ AS
41 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 208. Advances to
42 Perform Covenants of Debtor. — (1) This section does not apply to
2022 IN 352—LS 6946/DI 101 11
1 a supervised loan made after June 30, 2022, under section 508.1 of
2 this chapter. If the agreement with respect to a consumer loan,
3 refinancing, or consolidation contains covenants by the debtor to
4 perform certain duties pertaining to insuring or preserving collateral
5 and if the lender pursuant to the agreement pays for performance of the
6 duties on behalf of the debtor, the lender may add the amounts paid to
7 the debt. Within a reasonable time after advancing any sums, he the
8 lender shall state to the debtor in writing the amount of the sums
9 advanced, any charges with respect to this amount, and any revised
10 payment schedule and, if the duties of the debtor performed by the
11 lender pertain to insurance, a brief description of the insurance paid for
12 by the lender including the type and amount of coverages. No further
13 information need be given.
14 (2) A loan finance charge may be made for sums advanced pursuant
15 to subsection (1) at a rate not exceeding the rate stated to the debtor
16 pursuant to the provisions on disclosure (Part 3) with respect to the
17 loan, refinancing, or consolidation, except that with respect to a
18 revolving loan account the amount of the advance may be added to the
19 unpaid balance of the debt and the lender may make a loan finance
20 charge not exceeding that permitted by the provisions on loan finance
21 charge for consumer loans (24-4.5-3-201) (section 201 of this
22 chapter) or for supervised loans (24-4.5-3-508), (section 508 of this
23 chapter), whichever is appropriate.
24 SECTION 7. IC 24-4.5-3-501, AS AMENDED BY P.L.91-2013,
25 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
26 JULY 1, 2022]: Sec. 501. Definitions:
27 (1) "Supervised loan" means a consumer loan:
28 (a) in which the rate of the loan finance charge exceeds
29 twenty-five percent (25%) per year as determined according to the
30 provisions on loan finance charge for consumer loans in section
31 201 of this chapter, in the case of a loan entered into before
32 July 1, 2022; or
33 (b) that is made in accordance with section 508.1 of this
34 chapter, in the case of a loan entered into after June 30, 2022.
35 (2) "Supervised lender" means a person authorized to make or take
36 assignments of supervised loans.
37 SECTION 8. IC 24-4.5-3-508, AS AMENDED BY P.L.85-2020,
38 SECTION 16, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
39 JULY 1, 2022]: Sec. 508. Loan Finance Charge for Supervised Loans
40 ) (1) This section applies only to a supervised loan entered into
41 before July 1, 2022. With respect to a supervised loan, including a
42 loan pursuant to a revolving loan account, a supervised lender may
2022 IN 352—LS 6946/DI 101 12
1 contract for and receive a loan finance charge not exceeding that
2 permitted by this section.
3 (2) The loan finance charge, calculated according to the actuarial
4 method, may not exceed the equivalent of the greater of:
5 (a) the total of:
6 (i) thirty-six percent (36%) per year on that part of the unpaid
7 balances of the principal (as defined in section 107(3) of this
8 chapter) which is two thousand dollars ($2,000) or less;
9 (ii) twenty-one percent (21%) per year on that part of the
10 unpaid balances of the principal (as defined in section 107(3)
11 of this chapter) which is more than two thousand dollars
12 ($2,000) but does not exceed four thousand dollars ($4,000);
13 and
14 (iii) fifteen percent (15%) per year on that part of the unpaid
15 balances of the principal (as defined in section 107(3) of this
16 chapter) which is more than four thousand dollars ($4,000); or
17 (b) twenty-five percent (25%) per year on the unpaid balances of
18 the principal (as defined in section 107(3) of this chapter).
19 (3) In the case of a loan agreement entered into before July 1, 2020,
20 this section does not limit or restrict the manner of contracting for the
21 loan finance charge, whether by way of add-on, discount, or otherwise,
22 so long as the rate of the loan finance charge does not exceed that
23 permitted by this section. If the loan is precomputed:
24 (a) the loan finance charge may be calculated on the assumption
25 that all scheduled payments will be made when due; and
26 (b) the effect of prepayment is governed by the provisions on
27 rebate upon prepayment in section 210 of this chapter.
28 After June 30, 2020, and before July 1, 2022, a loan agreement may
29 not be entered into for a precomputed supervised loan.
30 (4) The term of a loan for the purposes of this section commences
31 on the date the loan is made. Differences in the lengths of months are
32 disregarded, and a day may be counted as one-thirtieth (1/30) of a
33 month. Subject to classifications and differentiations the lender may
34 reasonably establish, a part of a month in excess of fifteen (15) days
35 may be treated as a full month if periods of fifteen (15) days or less are
36 disregarded and that procedure is not consistently used to obtain a
37 greater yield than would otherwise be permitted.
38 (5) Subject to classifications and differentiations the lender may
39 reasonably establish, the lender may make the same loan finance
40 charge on all principal amounts within a specified range. A loan
41 finance charge does not violate subsection (2) if:
42 (a) when applied to the median amount within each range, it does
2022 IN 352—LS 6946/DI 101 13
1 not exceed the maximum permitted in subsection (2); and
2 (b) when applied to the lowest amount within each range, it does
3 not produce a rate of loan finance charge exceeding the rate
4 calculated according to subdivision (a) by more than eight percent
5 (8%) of the rate calculated according to subdivision (a).
6 (6) The amounts of two thousand dollars ($2,000) and four thousand
7 dollars ($4,000) in subsection (2) and thirty dollars ($30) in subsection
8 (7) are subject to change pursuant to the provisions on adjustment of
9 dollar amounts (IC 24-4.5-1-106). However, notwithstanding
10 IC 24-4.5-1-106(1), for the adjustment of the amount of thirty dollars
11 ($30), the Reference Base Index to be used is the Index for October
12 1992. Notwithstanding IC 24-4.5-1-106(1), for the adjustment of the
13 amounts of two thousand dollars ($2,000) and four thousand dollars
14 ($4,000), the Reference Base Index to be used is the Index for October
15 2012.
16 (7) With respect to a supervised loan not made pursuant to a
17 revolving loan account, the lender may contract for and receive a
18 minimum loan finance charge of not more than thirty dollars ($30). The
19 minimum loan finance charge allowed under this subsection may be
20 imposed only if the lender does not assess a nonrefundable prepaid
21 finance charge under subsection (8) and:
22 (a) the debtor prepays in full a consumer loan, refinancing, or
23 consolidation, regardless of whether the loan, refinancing, or
24 consolidation is precomputed;
25 (b) the loan, refinancing, or consolidation prepaid by the debtor
26 is subject to a loan finance charge that:
27 (i) is contracted for by the parties; and
28 (ii) does not exceed the rate prescribed in subsection (2); and
29 (c) the loan finance charge earned at the time of prepayment is
30 less than the minimum loan finance charge contracted for under
31 this subsection.
32 (8) Except as provided in subsections (7) and (10)(c), in addition to
33 the loan finance charge provided for in this section and to any other
34 charges and fees permitted by this chapter, the lender may contract for
35 and receive a nonrefundable prepaid finance charge of not more than
36 fifty dollars ($50) if the loan agreement is entered into before July 1,
37 2020, and, if the loan agreement is entered into after June 30, 2020, not
38 more than the following:
39 (a) Seventy-five dollars ($75), in the case of a loan agreement for
40 a principal amount which is two thousand dollars ($2,000) or less.
41 (b) One hundred fifty dollars ($150) in the case of a loan
42 agreement for a principal amount which is more than two
2022 IN 352—LS 6946/DI 101 14
1 thousand dollars ($2,000) but does not exceed four thousand
2 dollars ($4,000).
3 (c) Two hundred dollars ($200) in the case of a loan agreement
4 for a principal amount which is more than four thousand dollars
5 ($4,000).
6 The amounts in this subsection are not subject to change under
7 IC 24-4.5-1-106.
8 (9) The nonrefundable prepaid finance charge provided for in
9 subsection (8) is not subject to refund or rebate. However, for any
10 supervised loan entered into after June 30, 2020, any amount charged
11 by the lender, other than by a lender that is a depository institution (as
12 defined in IC 24-4.5-1-301.5(12)), under subsection (8) that exceeds
13 the applicable amount permitted by subsection (8) constitutes a
14 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
15 refund. Any amount charged by a depository institution (as defined in
16 IC 24-4.5-1-301.5(12)) under subsection (8) that exceeds the applicable
17 amount set forth in subsection (8) is subject to refund.
18 (10) Notwithstanding subsections (8) and (9), in the case of a
19 supervised loan that is not secured by an interest in land, if a lender
20 retains any part of a nonrefundable prepaid finance charge charged on
21 a loan that is paid in full by a new loan from the same lender, the
22 following apply:
23 (a) If the loan is paid in full by the new loan within three (3)
24 months after the date of the prior loan, the lender may not charge
25 a nonrefundable prepaid finance charge on the new loan, or, in the
26 case of a revolving loan, on the increased credit line.
27 (b) The lender may not assess more than two (2) nonrefundable
28 prepaid finance charges in any twelve (12) month period.
29 (c) Subject to subdivisions (a) and (b), if a supervised loan that is
30 entered into by a lender and a debtor before July 1, 2020, is paid
31 in full by a new loan from the same lender after June 30, 2020, the
32 lender may contract for and receive a nonrefundable prepaid
33 finance charge in the amount set forth in subsection (8) for loan
34 agreements entered into after June 30, 2020.
35 (11) In the case of a supervised loan that is secured by an interest in
36 land, this section does not prohibit a lender from contracting for and
37 receiving a fee for preparing deeds, mortgages, reconveyances, and
38 similar documents under section 202(1)(d)(ii) of this chapter, in
39 addition to the nonrefundable prepaid finance charge provided for in
40 subsection (8).
41 SECTION 9. IC 24-4.5-3-508.1 IS ADDED TO THE INDIANA
42 CODE AS A NEW SECTION TO READ AS FOLLOWS
2022 IN 352—LS 6946/DI 101 15
1 [EFFECTIVE JULY 1, 2022]: Sec. 508.1. (1) This section applies to
2 a supervised loan entered into after June 30, 2022.
3 (2) Subject to subsections (4) and (5), with respect to a
4 supervised loan, other than a loan pursuant to a revolving loan
5 account, a supervised lender may contract for and receive the
6 following if the supervised loan meets all requirements set forth in
7 this section:
8 (a) A loan finance charge, calculated according to the
9 actuarial method, not exceeding thirty-six percent (36%) per
10 year on the unpaid balances of the principal (as defined in
11 section 107(3) of this chapter). The loan finance charge does
12 not include the fees and charges set forth in subdivisions (b)
13 through (e).
14 (b) A monthly maintenance fee that does not exceed thirteen
15 percent (13%) of the principal amount originally contracted
16 for, as long as the fee is not added to the unpaid balances of
17 the principal (as defined in section 107(3) of this chapter) that
18 are subject to the loan finance charge under subdivision (a).
19 (c) Delinquency charges permitted under section 203.5 of this
20 chapter.
21 (d) Charges permitted under section 202(1)(f) of this chapter
22 for returned payments of dishonored checks, electronic funds
23 transfers, negotiable orders of withdrawal, or share drafts
24 issued by the borrower.
25 (e) If the principal amount originally contracted for is at least
26 four hundred dollars ($400), an underwriting fee not to exceed
27 fifty dollars ($50).
28 No other charges are permitted in connection with a supervised
29 loan, including any charges for cashing the loan proceeds if the
30 proceeds are given in check form.
31 (3) The principal amount of a supervised loan may not exceed
32 two thousand five hundred dollars ($2,500). The amount of two
33 thousand five hundred dollars ($2,500) in this subdivision is subject
34 to change under IC 24-4.5-1-106.
35 (4) Notwithstanding any other law, a lender may not contract
36 for, charge, collect, or receive in connection with a supervised loan
37 made under this section a total amount of fees and charges over the
38 life of the loan, as disclosed in accordance with subsection 9(a), that
39 exceeds:
40 (a) seventy-five percent (75%) of the principal amount
41 originally contracted for, if the principal amount originally
42 contracted for is one thousand five hundred dollars ($1,500)
2022 IN 352—LS 6946/DI 101 16
1 or less; or
2 (b) one hundred percent (100%) of the principal amount
3 originally contracted for, if the principal amount originally
4 contracted for is greater than one thousand five hundred
5 dollars ($1,500).
6 All fees and charges imposed in connection with the loan must be
7 included in the calculation of the total amount of fees and charges
8 under this subsection, except for delinquency charges described in
9 subsection (2)(c) and charges for returned payments described in
10 subsection (2)(d).
11 (5) A supervised loan made under this section must be an
12 interest bearing loan payable in substantially equal installments
13 consisting of:
14 (a) principal;
15 (b) the loan finance charge permitted under subsection (2)(a);
16 and
17 (c) other permitted fees and charges under subsection (2);
18 combined.
19 (6) A supervised loan may not be made for a term of:
20 (a) less than three (3) calendar months; or
21 (b) more than twenty-four (24) calendar months.
22 (7) Before making a supervised loan under this section, the
23 lender shall make a reasonable attempt to verify the borrower's:
24 (a) gross monthly income, exclusive of any income other than
25 gross pay received; or
26 (b) monthly funds actually received, net of taxes and other
27 deductions;
28 including, at a minimum, obtaining from the borrower at least one
29 (1) recent pay stub or other written evidence of the borrower's
30 gross monthly income or net monthly funds received (as described
31 in subsections (a) and (b), respectively), such as a bank statement.
32 For purposes of this subsection, verification of a borrower's gross
33 monthly income or net monthly funds received must include the
34 lender's receipt of at least one (1) document that, when presented
35 to the lender, is dated not earlier than ninety (90) days before the
36 borrower's initiation of the loan transaction and not later than the
37 time the loan is made.
38 (8) A supervised lender may not have more than one (1)
39 supervised loan made under this section outstanding to the same
40 borrower at any time. A supervised lender shall maintain a record
41 of loan transactions for each borrower with whom the supervised
42 lender has entered into a supervised loan transaction. A record
2022 IN 352—LS 6946/DI 101 17
1 required by this subsection must include at least the following
2 information:
3 (a) The name, address, and telephone number of the
4 borrower.
5 (b) The date each payment is made under the loan and the due
6 date of the payment.
7 (9) A supervised loan made under this section must be entered
8 into under a written contract that sets forth the terms and
9 conditions of the loan. The lender shall provide a copy of the loan
10 contract to the borrower upon consummation of the loan
11 transaction. The loan contract must disclose in a clear and concise
12 manner the following:
13 (a) The total amount of fees and charges the borrower will be
14 required to pay under the loan contract.
15 (b) The total amount of each payment, the due date for each
16 payment, and the total number of payments the borrower will
17 be required to make under the loan contract.
18 (c) The annual percentage rate, inclusive of monthly fees.
19 (d) The following notices in at least 10 point bold face type:
20 (i) "NOTICE TO THE BORROWER: This is a supervised
21 loan made under IC 24-4.5-3-508.1, which allows lenders
22 to charge higher than average rates if they follow certain
23 consumer protection rules. INDIANA LAW PROHIBITS
24 THIS LENDER AND ITS AFFILIATES FROM HAVING
25 MORE THAN ONE SUCH LOAN OUTSTANDING TO
26 YOU AT ANY TIME. A LENDER MAY NOT DIVIDE
27 THE AMOUNT YOU BORROW INTO MULTIPLE
28 LOANS.".
29 (ii) "You have the right to rescind this loan by returning
30 the principal amount originally contracted for to the
31 lender not later than 5:00 p.m. on the second business day
32 immediately following the day on which you enter into this
33 contract.".
34 (iii) "Electronic payment of amounts due under this
35 contract is optional. You have the right to revoke or
36 remove your authorization for electronic payment at any
37 time.".
38 Before consummation of the loan transaction, the lender must
39 obtain the borrower's signature or initials next to each notice
40 required under this subdivision.
41 (10) When a borrower enters into a supervised loan under this
42 section, the lender shall provide the borrower with a pamphlet
2022 IN 352—LS 6946/DI 101 18
1 approved by the department that describes:
2 (a) the availability of debt management and credit counseling
3 services;
4 (b) the borrower's rights and responsibilities in the
5 transaction; and
6 (c) the availability of the 211 telephone dialing code for access
7 to human services information and referrals, including
8 information on and referrals to governmental or nonprofit
9 organizations that assist persons in paying for housing costs,
10 utility bills, and food.
11 (11) A borrower may rescind, without penalty, a supervised loan
12 transaction made under this section by:
13 (a) notifying the lender, in the manner prescribed by the
14 lender under the loan contract, that the borrower wants to
15 rescind the loan transaction; and
16 (b) returning to the lender the cash amount of the principal
17 originally contracted for;
18 not later than 5:00 p.m. on the second business day immediately
19 following the day on which the loan transaction is entered into.
20 Upon receipt of the borrower's notice and the cash amount of the
21 principal under this subsection, the lender shall return to the
22 borrower any fees and charges collected by the lender in
23 connection with the loan.
24 (12) A supervised lender shall not fail or refuse to accept cash
25 or other good funds from the borrower, or from a third party on
26 behalf of the borrower, for full or partial repayment of a
27 supervised loan under this section. For purposes of this subsection,
28 "good funds" includes:
29 (a) a certified check;
30 (b) a cashier's check;
31 (c) a bank check; or
32 (d) any other negotiable instrument;
33 with respect to which payment cannot be stopped by the paying
34 party.
35 (13) The proceeds of a supervised loan made under this section
36 may not be applied to any other loan made to the same borrower
37 by the lender or by an affiliate of the lender. However, a lender or
38 an affiliate of the lender may refinance a supervised loan made to
39 a borrower under this section if the refinanced loan is also a
40 supervised loan made under this section.
41 (14) With respect to a supervised loan transaction in which cash
42 is advanced to the borrower in exchange for a personal check of
2022 IN 352—LS 6946/DI 101 19
1 the borrower, the lender may not accept a check dated earlier than
2 the date of the first required loan payment as set forth in the loan
3 contract. Upon receipt of the check from the borrower, the lender
4 shall immediately stamp the back of the check with an
5 endorsement that states the following:
6 "Negotiated as part of a loan made under IC 24-4.5-3-508.1.
7 Holder takes this check subject to the claims and defenses of
8 the maker.".
9 A supervised loan described in this subsection is not considered a
10 small loan subject to IC 24-4.5-7 if the supervised loan otherwise
11 complies with this section.
12 (15) A person shall not commit or cause to be committed any of
13 the following acts or practices in connection with a supervised loan
14 under this section:
15 (a) Using any device or agreement that would have the effect
16 of charging or collecting more fees, charges, or interest than
17 allowed by this section, including:
18 (i) entering into a different type of transaction with the
19 borrower;
20 (ii) entering into a sales/leaseback or rebate arrangement;
21 (iii) making catalog sales; or
22 (iv) entering into any other transaction with the borrower
23 or with any other person if the transaction is designed to
24 evade the applicability of this section.
25 (b) Including any of the following provisions in the loan
26 contract or in any loan document:
27 (i) A hold harmless clause.
28 (ii) A confession of judgment clause.
29 (iii) A provision in which the borrower agrees not to assert
30 a claim or defense arising out of the loan contract.
31 (iv) A provision by which a person acting on behalf of the
32 lender is treated as an agent of the borrower in connection
33 with the supervised loan.
34 (c) Accepting real or personal property, or any interest in
35 property, in connection with the loan other than a check, as
36 described in subsection (14).
37 (d) Drafting funds electronically from a borrower's account
38 without the borrower's express written authorization.
39 (e) Failing to stop attempts to draft funds electronically from
40 a borrower's account upon request from the borrower or the
41 borrower's agent.
42 (f) Attempting to draft funds electronically from a borrower's
2022 IN 352—LS 6946/DI 101 20
1 account after four (4) consecutive attempts have failed, unless
2 the lender obtains new written authorization from the
3 borrower to transfer or withdraw funds electronically from
4 the borrower's account.
5 This subsection does not prohibit the conversion of a negotiable
6 instrument into an electronic form for processing through the
7 automated clearing house system.
8 (16) In applying the provisions of this article on
9 unconscionability (IC 24-4.5-5-108 and IC 24-4.5-6-111) to a
10 supervised loan transaction made under this section, consideration
11 shall be given, among other factors, to the following:
12 (a) The ability of the borrower to repay the supervised loan
13 within the terms of the loan made under this section.
14 (b) Whether the borrower's original request as to the amount
15 and terms of the loan were within the limitations set forth in
16 this section.
17 (17) Any person that is not exempt from licensure under section
18 502 of this chapter and that:
19 (a) facilitates;
20 (b) enables; or
21 (c) acts as a conduit or agent for;
22 a third party that enters into a consumer loan that is subject to
23 both the loan finance charge described in subsection (2)(a) and the
24 monthly maintenance fee described in subsection (2)(b) is required
25 to obtain a license under section 502 of this chapter, regardless of
26 whether the third party is exempt from licensure under section 502
27 of this chapter.
28 (18) Regardless of whether a person is exempt under federal or
29 state law from:
30 (a) the finance charge limitation set forth in subsection (2)(a);
31 or
32 (b) licensure under section 502 of this chapter;
33 if the person enters into a supervised loan transaction under this
34 section, all other provisions of this section apply to both the person
35 and the loan transaction.
36 (19) A lender that makes at least one (1) supervised loan under
37 this chapter in Indiana during a calendar year shall remit the
38 following to the department at the time of license renewal under
39 section 503.6 of this chapter, if the lender is required to be licensed
40 under section 502 of this chapter, or at such other time as the
41 department prescribes, if the lender is exempt from licensure
42 under section 502 of this chapter:
2022 IN 352—LS 6946/DI 101 21
1 (a) An annual fee, paid separately from the required renewal
2 fee (if applicable), in the amount of two hundred fifty dollars
3 ($250).
4 (b) An additional two hundred fifty dollars ($250) per branch
5 location in Indiana from which the lender makes supervised
6 loans under this section, after the lender's first Indiana
7 location from which the lender makes supervised loans under
8 this chapter.
9 All amounts collected by the department under this subsection
10 shall be held in the consumer financial education fund established
11 by subsection (20) and shall be used exclusively, in the
12 department's discretion, for providing or supporting financial
13 education programs for the benefit of Indiana consumers. A lender
14 may not pass any part of the amounts required by this subsection
15 onto borrowers by imposing an additional charge in connection
16 with any supervised loan, or through any charge or fee authorized
17 under subsection (2).
18 (20) The consumer financial education fund is established for
19 the purpose of paying expenses incurred by the department in
20 administering subsection (19), and for paying all expenses incurred
21 and all compensation paid by the department relating to consumer
22 financial education. The following apply with respect to the fund:
23 (a) The department shall administer the fund.
24 (b) The fund consists of:
25 (i) money deposited in the fund under subsection (19); and
26 (ii) donations, gifts, and money received from any other
27 source.
28 (c) The expenses of administering the fund shall be paid from
29 money in the fund.
30 (d) The treasurer of state shall invest the money in the fund
31 not currently needed to meet the obligations of the fund in the
32 same manner as other public money may be invested. Interest
33 that accrues from these investments shall be deposited in the
34 fund.
35 (e) Money in the fund at the end of a state fiscal year does not
36 revert to the state general fund.
37 (f) Money in the fund is appropriated for the purpose set forth
38 in this subsection.
39 (21) Except for a person described in section 502(1) of this
40 chapter, a person that enters into at least one (1) supervised loan
41 transaction under this section in Indiana in any calendar year,
42 shall file with the department, at such time and in such manner as
2022 IN 352—LS 6946/DI 101 22
1 the director may prescribe, a report concerning the person's
2 business and operations with respect to that calendar year. The
3 director shall prescribe the information to be included in the
4 report so as to enable the director to produce the analysis required
5 by subsection (22). The department may adopt rules under
6 IC 4-22-2 to implement this subsection, including emergency rules
7 in the manner provided under IC 4-22-2-37.1. Notwithstanding
8 IC 4-22-2-37.1(g), an emergency rule adopted by the department
9 under this subsection and in the manner provided under
10 IC 4-22-2-37.1 expires on the date on which a rule that supersedes
11 the emergency rule is adopted by the department under
12 IC 4-22-2-24 through IC 4-22-2-36.
13 (22) The director shall publish and make available to the public,
14 at least annually, an analysis of the information provided to the
15 department under subsection (21). The analysis must include the
16 following information with respect to the most recent calendar
17 year:
18 (a) The total number of supervised loan transactions entered
19 into.
20 (b) The total number of borrowers obligated under the loans
21 reported under subdivision (a).
22 (c) The average principal amount of the loans.
23 (d) The average contracted annual percentage rate of the
24 loans.
25 (e) The total amount of contracted finance charges under the
26 loans.
27 (f) The number of loans on which borrowers defaulted.
28 (g) The total number and total dollar value of charged off
29 loans. For purposes of this subdivision, "charged off loan"
30 means a loan with respect to which the lender has stopped
31 pursuing first party collection efforts.
32 (h) The total number and total dollar value of delinquency
33 charges (as authorized by subsection (2)(c)) incurred by
34 borrowers.
35 SECTION 10. IC 24-4.5-3-509 IS AMENDED TO READ AS
36 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 509. Use of Multiple
37 Agreements. — With respect to a consumer loan, no lender may permit
38 any person, or husband and wife, to become obligated in any way under
39 more than one loan agreement with the lender or with a person related
40 to the lender, with intent to obtain a higher rate of loan finance charge
41 than would otherwise be permitted by the provisions on loan finance
42 charge for supervised loans (IC 24-4.5-3-508) (section 508 of this
2022 IN 352—LS 6946/DI 101 23
1 chapter, for supervised loans made before July 1, 2022, or section
2 508.1 of this chapter, for supervised loans made after June 30,
3 2022), or to avoid disclosure of an annual percentage rate pursuant to
4 the provisions on disclosure (Part 3). The excess amount of loan
5 finance charge provided for in agreements in violation of this section
6 is an excess charge for the purposes of the provisions on effect of
7 violations on rights of parties (IC 24-4.5-5-202) and the provisions on
8 civil actions by the department (IC 24-4.5-6-113).
9 SECTION 11. IC 24-4.5-3-510, AS AMENDED BY P.L.186-2015,
10 SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
11 JULY 1, 2022]: Sec. 510. Restrictions on Interest in Land as Security
12 — (1) With respect to a supervised loan in that is made before July
13 1, 2022, and with respect to which the principal is four thousand
14 dollars ($4,000) or less, a lender may not contract for an interest in land
15 as security. With respect to a supervised loan that is made under
16 section 508.1 of this chapter after June 30, 2022, a lender may not
17 contract for an interest of land as security, as set forth in section
18 508.1(15)(c). A security interest taken in violation of this section is
19 void.
20 (2) The amount of four thousand dollars ($4,000) in subsection (1)
21 is subject to change pursuant to the provisions on adjustment of dollar
22 amounts (IC 24-4.5-1-106). However, notwithstanding
23 IC 24-4.5-1-106(1), the Reference Base Index to be used under this
24 subsection is the Index for October 2012.
25 SECTION 12. IC 24-4.5-3-511, AS AMENDED BY P.L.10-2019,
26 SECTION 107, IS AMENDED TO READ AS FOLLOWS
27 [EFFECTIVE JULY 1, 2022]: Sec. 511. Regular Schedule of
28 Payments; Maximum Loan Term — (1) This section applies only to
29 a supervised loan that is made before July 1, 2022. Supervised loans
30 not made pursuant to a revolving loan account and in which the
31 principal is four thousand dollars ($4,000) or less are payable in a
32 single instalment or shall be scheduled to be payable in substantially
33 equal instalments that are payable at equal periodic intervals, except to
34 the extent that the schedule of payments is adjusted to the seasonal or
35 irregular income of the debtor, and:
36 (a) over a period of not more than thirty-seven (37) months if the
37 principal is more than three hundred dollars ($300); or
38 (b) over a period of not more than twenty-five (25) months if the
39 principal is three hundred dollars ($300) or less.
40 (2) The amounts of three hundred dollars ($300) and four thousand
41 dollars ($4,000) in subsection (1) are subject to change pursuant to the
42 provisions on adjustment of dollar amounts (IC 24-4.5-1-106).
2022 IN 352—LS 6946/DI 101 24
1 However, notwithstanding IC 24-4.5-1-106(1), the Reference Base
2 Index to be used with respect to the amount of:
3 (a) three hundred dollars ($300) is the Index for October 1992;
4 and
5 (b) four thousand dollars ($4,000) is the Index for October 2012.
6 SECTION 13. IC 24-4.5-4-107, AS AMENDED BY P.L.85-2020,
7 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
8 JULY 1, 2022]: Sec. 107. Maximum Charge by Creditor for Insurance
9 - (1) This section does not apply to a supervised loan that is made
10 under IC 24-4.5-3-508.1 after June 30, 2022. Except as provided in
11 subsection (2), if a creditor contracts for or receives a separate charge
12 for insurance, the amount charged to the debtor for the insurance may
13 not exceed the premium to be charged by the insurer, as computed at
14 the time the charge to the debtor is determined, conforming to any rate
15 filings required by law and made by the insurer with the insurance
16 commissioner.
17 (2) A creditor who provides consumer credit insurance in relation
18 to a revolving charge account (as defined in IC 24-4.5-2-108) or
19 revolving loan account (as defined in IC 24-4.5-3-108) may calculate
20 the charge to the debtor in each billing cycle by applying the current
21 premium rate to one (1) of the following:
22 (a) The average daily unpaid balance of the debt in the cycle.
23 (b) The unpaid balance of the debt or a median amount within a
24 specified range of unpaid balances of debt on approximately the
25 same day of the cycle. The day of the cycle need not be the day
26 used in calculating the credit service charge (IC 24-4.5-2-201(6))
27 or loan finance charge (IC 24-4.5-3-201 and IC 24-4.5-3-508), but
28 the specified range shall be the range used for that purpose.
29 (c) The unpaid balances of principal calculated according to the
30 actuarial method.
31 (d) The amount of the insurance benefit for the cycle.
32 SECTION 14. IC 24-4.5-7-102, AS AMENDED BY P.L.69-2018,
33 SECTION 25, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
34 JULY 1, 2022]: Sec. 102. (1) Except as otherwise provided, all
35 provisions of this article applying to consumer loans, including
36 IC 24-4.5-3-502.2, apply to small loans, as defined in this chapter.
37 (2) Subject to subsection (7), a person may not regularly engage in
38 Indiana in any of the following actions unless the department first
39 issues to the person a license under this chapter:
40 (a) The making of small loans.
41 (b) Taking assignments of small loans.
42 (c) Undertaking the direct collection of payments from or the
2022 IN 352—LS 6946/DI 101 25
1 enforcement of rights against debtors arising from small loans.
2 (3) Subject to subsection (4), a person that seeks licensure under
3 this chapter:
4 (a) shall apply to the department for a license in the form and
5 manner prescribed by the department; and
6 (b) is subject to the same licensure requirements and procedures
7 as an applicant for a license to make consumer loans (other than
8 mortgage transactions) under IC 24-4.5-3-502.
9 (4) A person that seeks to make, take assignments of, or undertake
10 the direct collection of payments from or the enforcement of rights
11 against debtors arising from both:
12 (a) small loans under this chapter; and
13 (b) consumer loans (other than mortgage transactions) that are not
14 small loans;
15 must obtain a separate license from the department for each type of
16 loan, as described in IC 24-4.5-3-502(5).
17 (5) This chapter applies to:
18 (a) a lender;
19 (b) a bank, savings association, credit union, or other state or
20 federally regulated financial institution except those that are
21 specifically exempt regarding limitations on interest rates and
22 fees; or
23 (c) a person, if the department determines that a transaction is:
24 (i) in substance a disguised loan; or
25 (ii) the application of subterfuge for the purpose of avoiding
26 this chapter.
27 (6) A loan that:
28 (a) does not qualify as a small loan under section 104 of this
29 chapter;
30 (b) is for a term shorter than that specified in section 401(1) of
31 this chapter; or
32 (c) is made in violation of section 201, 401, 402, 404, or 410 of
33 this chapter;
34 is subject to this article. The department may conform the loan finance
35 charge for a loan described in this subsection to the limitations set forth
36 in IC 24-4.5-3-508(2). IC 24-4.5-3-201(1)(b).
37 (7) Notwithstanding IC 24-4.5-1-301.5, for purposes of subsection
38 (2), a person "regularly engages" in any of the activities described in
39 subsection (2) with respect to a small loan if the person:
40 (a) performed any of the activities described in subsection (2)
41 with respect to a small loan at least one (1) time in the preceding
42 calendar year; or
2022 IN 352—LS 6946/DI 101 26
1 (b) performs or will perform any of the activities described in
2 subsection (2) with respect to a small loan at least one (1) time in
3 the current calendar year if the person did not perform any of the
4 activities described in subsection (2) with respect to a small loan
5 at least one (1) time in the preceding calendar year.
6 SECTION 15. IC 24-4.5-7-104, AS AMENDED BY P.L.216-2013,
7 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
8 JULY 1, 2022]: Sec. 104. (1) "Small loan" means a loan:
9 (a) with a principal loan amount that is at least fifty dollars ($50)
10 and not more than five hundred fifty dollars ($550); and
11 (b) in which the lender holds the borrower's check for a specific
12 period, or receives the borrower's written authorization to debit
13 the borrower's account (other than as a result of default) under an
14 agreement, either express or implied, for a specific period, before
15 the lender:
16 (i) offers the check for deposit or presentment; or
17 (ii) exercises the authorization to debit the borrower's account.
18 (2) The amount of five hundred fifty dollars ($550) in subsection
19 (1)(a) is subject to change under the provisions on adjustment of dollar
20 amounts (IC 24-4.5-1-106). However, notwithstanding
21 IC 24-4.5-1-106(1), the Reference Base Index to be used under this
22 subsection is the Index for October 2006.
23 (3) Notwithstanding:
24 (a) IC 24-4.5-3-508.1(3); and
25 (b) IC 24-4.5-3-508.1(14);
26 a supervised loan made under IC 24-4.5-3-508.1 after June 30,
27 2022, is not considered a small loan that is subject to this chapter
28 if the supervised loan is made in compliance with IC 24-4.5-3-508.1.
29 SECTION 16. IC 24-4.5-7-411 IS AMENDED TO READ AS
30 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 411. Finance charges
31 made in compliance with this chapter are exempt from:
32 (a) IC 24-4.5-3-508, in the case of a small loan made before
33 July 1, 2022;
34 (b) IC 24-4.5-3-508.1, in the case of a small loan made after
35 June 30, 2022; and
36 (c) IC 35-45-7.
37 SECTION 17. IC 28-7-5-28 IS AMENDED TO READ AS
38 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 28. (a) The maximum
39 rate of interest charged by pawnbrokers shall be the same as the
40 maximum loan finance charge for supervised lenders under
41 IC 24-4.5-3-508(2). consumer loans set forth in
42 IC 24-4.5-3-201(1)(b). For purposes of this subsection:
2022 IN 352—LS 6946/DI 101 27
1 (1) the term of a loan commences on the date on which the loan
2 is made;
3 (2) differences in lengths of months are disregarded; and
4 (3) each day is counted as one-thirtieth (1/30) of a month.
5 The minimum term of a loan made by a pawnbroker is one (1) month.
6 However, on loans paid in full within the first month, the pawnbroker
7 may charge one (1) month's interest.
8 (b) Interest shall not be deducted in advance, neither shall the
9 pawnbroker induce or permit any borrower to split up or divide any
10 loan or loans for the purpose of evading any provisions of this chapter.
11 (c) If a pawnbroker charges or receives interest in excess of that
12 provided in this section, or makes any charges not authorized by this
13 chapter, the pawnbroker shall forfeit principal and interest and return
14 the pledge upon demand of the pledger and surrender of the pawn
15 ticket without the principal or interest. If such excessive or
16 unauthorized charges have been paid by the pledger, the pledger may
17 recover the same, including the principal if paid, in a civil action
18 against the pawnbroker.
19 SECTION 18. IC 35-45-7-2, AS AMENDED BY P.L.158-2013,
20 SECTION 536, IS AMENDED TO READ AS FOLLOWS
21 [EFFECTIVE JULY 1, 2022]: Sec. 2. A person who, in exchange for
22 the loan of any property, knowingly or intentionally receives or
23 contracts to receive from another person any consideration, at a rate
24 greater than two (2) times the rate specified in IC 24-4.5-3-508(2)(a)(i),
25 IC 24-4.5-3-201(1)(b), commits loansharking, a Level 6 felony.
26 However, loansharking is a Level 5 felony if force or the threat of force
27 is used to collect or to attempt to collect any of the property loaned or
28 any of the consideration for the loan.
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