LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6725 NOTE PREPARED: Feb 13, 2025
BILL NUMBER: HB 1174 BILL AMENDED: Feb 11, 2025
SUBJECT: Charges for Supervised Loans.
FIRST AUTHOR: Rep. Teshka BILL STATUS: 2
nd
Reading - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Supervised Loans - This bill provides that for a supervised loan that is made under
the Uniform Consumer Credit Code (UCCC) and that: (1) is entered into after June 30, 2025; (2) is not
secured by an interest in land or by personal property used or expected to be used as the debtor's principal
dwelling; and (3) has a principal amount that does not exceed $5,000; a lender may contract for and receive,
in addition to the loan finance charge and any other permitted charges and fees, a monthly service fee that
is based on the amount of principal originally contracted for, and must report the borrower's payments on the
supervised loan to at least one consumer reporting agency that compiles and maintains files on consumers
on a nationwide basis (as defined in 15 U.S.C. 1681a(p)) in accordance with the federal Fair Credit Reporting
Act (15 U.S.C. 1681 et seq.).
It provides that for a supervised loan that: (1) is entered into after June 30, 2025; (2) is not secured by an
interest in land or by personal property used or expected to be used as the debtor's principal dwelling; (3) has
a principal amount that is more than $5,000 but does not exceed $25,000; and (4) is for a term of at least six
months; a lender may contract for and receive a loan finance charge not exceeding 36% per year on the
unpaid balances of the principal.
For a supervised loan that qualifies for the flat 36% annual finance charge (instead of the blended loan
finance charge that applies to all other supervised loans), it requires the lender to: (1) report the borrower's
payments on the loan to at least one nationwide consumer reporting agency; and (2) offer to the borrower,
at or before the consummation of the loan and at no cost to the borrower, a consumer credit education
program provided by the lender or a third party provider.
Annual Report on Supervised Loans - The bill provides that, based on information contained in annual
composite reports filed with the Department of Financial Institutions (DFI) by creditors required to be
licensed under the UCCC, the DFI shall publish annually on the DFI's website a report that contains specified
information concerning supervised loans made after June 30, 2025, by nondepository licensees during the
reporting period covered by the composite reports.
The bill also makes conforming amendments to: (1) the UCCC; and (2) the statutes governing: (A)
HB 1174 1 pawnbrokers; and (B) loansharking.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Regulation Changes: This bill will increase the workload of the DFI
to regulate changes made to supervised loans, including determining which loans use the blended rate or the
maximum 36% rate and if there is a monthly service fee if certain conditions apply and the loan finance
charge for consumer loans other than supervised loan. The bill’s requirements are within the agency’s routine
administrative functions and should be able to be implemented with no additional appropriations, assuming
near customary agency staffing and resource levels.
Annual Report on Supervised Loans: The bill requires the DFI to publish an annual report on supervised
loans made by nondepository licensees during the reporting period covered by the composite reports. This
provision will increase the workload for the DFI, but it should be able to be implemented with no additional
appropriations, assuming near customary agency staffing and resource levels.
Penalty Provision: If there are fewer convictions of loansharking due to the bill’s changes to the maximum
loan finance charge for certain loans, the state will see a potential decrease in Level 6 felonies, which are
punishable by a prison term ranging from 6 to 30 months, with an advisory sentence of 1 year. The sentence
depends on mitigating and aggravating circumstances. Assuming offenders can be housed in existing
facilities with no additional staff, the marginal cost for medical care, food, and clothing is approximately
$4,719 annually, or $12.93 daily, per prisoner. However, any decrease in expenditures is likely to be small.
Explanation of State Revenues: Change in Interest Rates: Increasing the maximum allowable annual
interest rate for supervised loans that are entered into after July 1, 2025, and not secured by land or an
interest in land or personal property used or expected to be used as the principal dwelling of the debtor along
with increasing the loan finance charge may not exceed from 25% to 36% per year on the unpaid balances
of the principal for consumer loans other than supervised loans could decrease current DFI enforcement
actions taken against financial institutions. As a result, revenue to the General Fund from civil penalties
collected from violators could decrease. Current law allows the DFI to file civil actions against financial
institutions that violate provisions of the Uniform Consumer Credit Code. A maximum civil penalty of
$5,000 or $10,000 can be collected per violation, depending on mitigating and aggravating circumstances.
Court Fee Revenue: If fewer civil cases occur and court fees are collected, revenue to the state General Fund
will decrease. The total revenue per case ranges between $100 and $122. The amount deposited will vary
depending on whether the case is filed in a court of record or a municipal court. The following linked
document describes the fees and distribution of the revenue: Court fees imposed in civil, probate, and small
claims cases.
Penalty Provision: If fewer court cases occur and fines are collected, revenue to both the Common School
Fund (from criminal fines) and the state General Fund (from court fees) would decrease. The maximum fine
for a Class A misdemeanor is $5,000 and a Level 6 felony is $10,000. The total fee revenue per case would
range between $113 and $138. The amount of court fees deposited will vary depending on whether the case
is filed in a court of record or a municipal court. The following linked document describes the fees and
distribution of the revenue: Court fees imposed in criminal, juvenile, and civil violation cases.
Explanation of Local Expenditures: Penalty Provision: If fewer defendants are detained in county jails
prior to their court hearings, local expenditures for jail operations may decrease. However, any decrease in
HB 1174 2 expenditures would likely be small.
Explanation of Local Revenues: Court Fee Revenue: If fewer cases occur, less revenue will be collected
by certain local units. If the case is filed in a court of record, the county will receive $32 and qualifying
municipalities will receive a share of $3. If the case is filed in a municipal court, the county receives $20,
and the municipality will receive $37. The following linked document describes the fees and distribution of
the revenue: Court fees imposed in civil, probate, and small claims cases.
Penalty Provision: If fewer court actions occur and a guilty verdict is entered, less revenue will be collected
by certain local units. If the case is filed in a court of record, the county general fund will receive $47.40 and
qualifying municipalities will receive a share of $3.60. If the case is filed in a municipal court, the county
receives $30, and the municipality will receive $46. The following linked document describes the fees and
distribution of the revenue: Court fees imposed in criminal, juvenile, and civil violation cases.
State Agencies Affected: Department of Financial Institutions; Department of Correction.
Local Agencies Affected: Trial courts, city and town courts, local law enforcement agencies.
Information Sources: Indiana Supreme Court, Indiana Trial Court Fee Manual; Department of Correction.
Fiscal Analyst: Nate Bodnar, 317-234-9476.
HB 1174 3