*HB1174.1*
February 11, 2025
HOUSE BILL No. 1174
_____
DIGEST OF HB 1174 (Updated February 11, 2025 11:40 am - DI 154)
Citations Affected: IC 24-4.5; IC 28-7; IC 35-45.
Synopsis: Charges for supervised loans. 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.). 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), 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
(Continued next page)
Effective: July 1, 2025.
Teshka, Judy, Heaton
January 8, 2025, read first time and referred to Committee on Financial Institutions.
February 11, 2025, amended, reported — Do Pass.
HB 1174—LS 6725/DI 101 Digest Continued
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. Provides that, based on information contained in annual
composite reports filed with the department of financial institutions
(department) by creditors required to be licensed under the UCCC, the
department shall publish annually on the department'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. Makes conforming
amendments to: (1) the UCCC; and (2) the statutes governing: (A)
pawnbrokers; and (B) loansharking.
HB 1174—LS 6725/DI 101HB 1174—LS 6725/DI 101 February 11, 2025
First Regular Session of the 124th General Assembly (2025)
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 2024 Regular Session of the General Assembly.
HOUSE BILL No. 1174
A BILL FOR AN ACT to amend the Indiana Code concerning trade
regulation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 24-4.5-3-201, AS AMENDED BY P.L.29-2022,
2 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2025]: Sec. 201. Loan Finance Charge for Consumer Loans
4 other than Supervised Loans—(1) This section does not apply to a
5 supervised loan (as defined in section 501 of this chapter). Except as
6 provided in subsections (7) and (9), with respect to a consumer loan,
7 a lender may contract for a loan finance charge, calculated according
8 to the actuarial method, not exceeding twenty-five percent (25%)
9 thirty-six percent (36%) per year on the unpaid balances of the
10 principal (as defined in section 107(3) of this chapter).
11 (2) In the case of a loan agreement entered into before July 1, 2020,
12 this section does not limit or restrict the manner of contracting for the
13 loan finance charge, whether by way of add-on, discount, or otherwise,
14 so long as the rate of the loan finance charge does not exceed that
15 permitted by this section. If the loan is precomputed:
HB 1174—LS 6725/DI 101 2
1 (a) the loan finance charge may be calculated on the assumption
2 that all scheduled payments will be made when due; and
3 (b) the effect of prepayment is governed by the provisions on
4 rebate upon prepayment in section 210 of this chapter.
5 (3) The following apply to a loan agreement for a consumer loan (or
6 for the refinancing or consolidation of a consumer loan) that is entered
7 into after June 30, 2020:
8 (a) The consumer loan is subject to this section, including the
9 limitations set forth in:
10 (i) subsection (1) with respect to the loan finance charge; and
11 (ii) subsection (9)(b) with respect to the amount of the
12 authorized nonrefundable prepaid finance charge, in the case
13 of a consumer loan that is not secured by an interest in land.
14 (b) The loan finance charge authorized by this section must be:
15 (i) contracted for between the lender and the debtor; and
16 (ii) calculated by applying a rate not exceeding the rate set
17 forth in subsection (1) to unpaid balances of the principal (as
18 defined in section 107(3) of this chapter).
19 (c) A loan agreement for a precomputed consumer loan is
20 prohibited.
21 (d) Subject to subsection (12), in addition to the loan finance
22 charge authorized by subsection (1) and to any other fees
23 permitted by this chapter, and not subject to the twenty-five
24 percent (25%) thirty-six percent (36%) rate set forth in
25 subsection (1), the lender may contract for and receive as a
26 condition for, or an incident to, the extension of credit a
27 nonrefundable prepaid finance charge under subsection (9),
28 whether the charge is:
29 (i) paid separately in cash or by check before or at
30 consummation; or
31 (ii) withheld from the proceeds of the consumer loan.
32 (4) For the purposes of this section, the term of a loan commences
33 with the date the loan is made. Differences in the lengths of months are
34 disregarded, and a day may be counted as one-thirtieth (1/30) of a
35 month. Subject to classifications and differentiations the lender may
36 reasonably establish, a part of a month in excess of fifteen (15) days
37 may be treated as a full month if periods of fifteen (15) days or less are
38 disregarded and if that procedure is not consistently used to obtain a
39 greater yield than would otherwise be permitted. For purposes of
40 computing average daily balances, the creditor may elect to treat all
41 months as consisting of thirty (30) days.
42 (5) With respect to a consumer loan made pursuant to a revolving
HB 1174—LS 6725/DI 101 3
1 loan account:
2 (a) the loan finance charge shall be deemed not to exceed the
3 maximum annual percentage rate if the loan finance charge
4 contracted for and received does not exceed a charge in each
5 monthly billing cycle which is two and eighty-three thousandths
6 percent (2.083%) of an amount not greater than:
7 (i) the average daily balance of the debt;
8 (ii) the unpaid balance of the debt on the same day of the
9 billing cycle; or
10 (iii) subject to subsection (6), the median amount within a
11 specified range within which the average daily balance or the
12 unpaid balance of the debt, on the same day of the billing
13 cycle, is included; for the purposes of this clause and clause
14 (ii), a variation of not more than four (4) days from month to
15 month is "the same day of the billing cycle";
16 (b) if the billing cycle is not monthly, the loan finance charge
17 shall be deemed not to exceed the maximum annual percentage
18 rate if the loan finance charge contracted for and received does
19 not exceed a percentage which bears the same relation to
20 one-twelfth (1/12) the maximum annual percentage rate as the
21 number of days in the billing cycle bears to thirty (30); and
22 (c) notwithstanding subsection (1), if there is an unpaid balance
23 on the date as of which the loan finance charge is applied, the
24 lender may contract for and receive a charge not exceeding fifty
25 cents ($0.50) if the billing cycle is monthly or longer, or the pro
26 rata part of fifty cents ($0.50) which bears the same relation to
27 fifty cents ($0.50) as the number of days in the billing cycle bears
28 to thirty (30) if the billing cycle is shorter than monthly, but no
29 charge may be made pursuant to this subdivision if the lender has
30 made an annual charge for the same period as permitted by the
31 provisions on additional charges in section 202(1)(c) of this
32 chapter.
33 (6) Subject to classifications and differentiations the lender may
34 reasonably establish, the lender may make the same loan finance
35 charge on all amounts financed within a specified range. A loan finance
36 charge does not violate subsection (1) if:
37 (a) when applied to the median amount within each range, it does
38 not exceed the maximum permitted by subsection (1); and
39 (b) when applied to the lowest amount within each range, it does
40 not produce a rate of loan finance charge exceeding the rate
41 calculated according to subdivision (a) by more than eight percent
42 (8%) of the rate calculated according to subdivision (a).
HB 1174—LS 6725/DI 101 4
1 (7) With respect to a consumer loan not made pursuant to a
2 revolving loan account, the lender may contract for and receive a
3 minimum loan finance charge of not more than thirty dollars ($30). The
4 minimum loan finance charge allowed under this subsection may be
5 imposed only if the lender does not contract for or receive a
6 nonrefundable prepaid finance charge under subsection (9) and:
7 (a) the debtor prepays in full a consumer loan, refinancing, or
8 consolidation, regardless of whether the loan, refinancing, or
9 consolidation is precomputed;
10 (b) the loan, refinancing, or consolidation prepaid by the debtor
11 is subject to a loan finance charge that:
12 (i) is contracted for by the parties; and
13 (ii) does not exceed the rate prescribed in subsection (1); and
14 (c) the loan finance charge earned at the time of prepayment is
15 less than the minimum loan finance charge contracted for under
16 this subsection.
17 (8) The amount of thirty dollars ($30) in subsection (7) is subject to
18 change under the provisions on adjustment of dollar amounts
19 (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the
20 Reference Base Index to be used under this subsection is the Index for
21 October 1992.
22 (9) Except as provided in subsection (7), and subject to subsection
23 (12), in addition to the loan finance charge authorized by subsection (1)
24 and to any other charges and fees permitted by this chapter, a lender
25 may contract for and receive a nonrefundable prepaid finance charge
26 of not more than the following:
27 (a) In the case of a consumer loan that is secured by an interest in
28 land and that:
29 (i) is not made under a revolving loan account, two percent
30 (2%) of the loan amount; or
31 (ii) is made under a revolving loan account, two percent (2%)
32 of the line of credit.
33 (b) In the case of consumer loan that is not secured by an interest
34 in land, fifty dollars ($50) if the loan agreement is entered into
35 before July 1, 2020. If the loan agreement is entered into after
36 June 30, 2020, not more than the following:
37 (i) Seventy-five dollars ($75), in the case of a loan agreement
38 for a principal amount which is two thousand dollars ($2,000)
39 or less.
40 (ii) One hundred fifty dollars ($150) in the case of a loan
41 agreement for a principal amount which is more than two
42 thousand dollars ($2,000) but does not exceed four thousand
HB 1174—LS 6725/DI 101 5
1 dollars ($4,000).
2 (iii) Two hundred dollars ($200) in the case of a loan
3 agreement for a principal amount which is more than four
4 thousand dollars ($4,000).
5 The amounts in this subsection are not subject to change under
6 IC 24-4.5-1-106.
7 (10) The nonrefundable prepaid finance charge provided for in
8 subsection (9) is not subject to refund or rebate. However, for any loan
9 entered into after June 30, 2020, any amount charged by the lender,
10 other than by a lender that is a depository institution (as defined in
11 IC 24-4.5-1-301.5(12)), under subsection (9) that exceeds the
12 applicable amount permitted by subsection (9)(b) constitutes a
13 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
14 refund. Any amount charged by a depository institution (as defined in
15 IC 24-4.5-1-301.5(12)) under subsection (9) that exceeds the applicable
16 amount set forth in subsection (9)(b) is subject to refund.
17 (11) If the director determines that a lender's accrual method of
18 accounting as applied to a consumer loan under this section involves
19 the application of subterfuge for the purpose of circumventing this
20 chapter, the director may conform the loan finance charge and fees for
21 the transaction to the limitations set forth in this section and may
22 require a refund of overcharges under IC 24-4.5-6-106(2)(a). A
23 determination by the director under this subsection:
24 (a) must be in writing;
25 (b) shall be delivered to all parties in the transaction; and
26 (c) is subject to IC 4-21.5-3.
27 (12) At the time of consummation of a consumer loan:
28 (a) the loan finance charge authorized by subsection (1); and
29 (b) the nonrefundable prepaid finance charge authorized by
30 subsection (9) (including any amount charged by a depository
31 institution (as defined in IC 24-4.5-1-301.5(12)) that exceeds the
32 applicable amount set forth in subsection (9)(b));
33 are subject to IC 35-45-7 and, when combined, may not exceed the rate
34 set forth in IC 35-45-7-2.
35 (13) Notwithstanding subsections (9) and (10), in the case of a
36 consumer loan that is not secured by an interest in land, if a lender
37 retains any part of a nonrefundable prepaid finance charge charged on
38 a loan that is paid in full by a new loan from the same lender, the
39 following apply:
40 (a) If the loan is paid in full by the new loan within three (3)
41 months after the date of the prior loan, the lender may not charge
42 a nonrefundable prepaid finance charge on the new loan, or, in the
HB 1174—LS 6725/DI 101 6
1 case of a revolving loan, on the increased credit line.
2 (b) The lender may not assess more than two (2) nonrefundable
3 prepaid finance charges in any twelve (12) month period.
4 (c) Subject to subdivisions (a) and (b), if a loan that is entered
5 into by a lender and a debtor before July 1, 2020, is paid in full by
6 a new loan from the same lender after June 30, 2020, the lender
7 may contract for and receive a nonrefundable prepaid finance
8 charge in the amount set forth in subsection (9)(b) for loan
9 agreements entered into after June 30, 2020.
10 (14) In the case of a consumer loan that is secured by an interest in
11 land, this section does not prohibit a lender from contracting for and
12 receiving a fee for preparing deeds, mortgages, reconveyances, and
13 similar documents under section 202(1)(d)(ii) of this chapter, in
14 addition to the nonrefundable prepaid finance charge provided for in
15 subsection (9).
16 SECTION 2. IC 24-4.5-3-203.5, AS AMENDED BY P.L.129-2020,
17 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
18 JULY 1, 2025]: Sec. 203.5. Delinquency Charges — (1) With respect
19 to a consumer loan, refinancing, or consolidation, the parties may
20 contract for a delinquency charge of not more than the following:
21 (a) Five dollars ($5) on any installment or minimum payment due
22 that is not paid in full not later than ten (10) days after its
23 scheduled due date, in the case of a consumer loan, refinancing,
24 or consolidation that is made before July 1, 2019. The amount of
25 five dollars ($5) in this subdivision is subject to change under
26 IC 24-4.5-1-106. In addition, the parties may provide by contract
27 for a delinquency charge that is subject to change. If the parties
28 provide by contract for a delinquency charge that is subject to
29 change, the lender shall disclose in the contract that the amount
30 of the delinquency charge is subject to change under
31 IC 24-4.5-1-106 or this section.
32 (b) In the case of a consumer loan, refinancing, or consolidation
33 that is made after June 30, 2019, the following:
34 (i) Five dollars ($5) on any installment or minimum payment
35 due that is not paid in full not later than ten (10) days after its
36 scheduled due date, if installments under the consumer loan,
37 refinancing, or consolidation are due every fourteen (14) days
38 or less. The amount of five dollars ($5) in this clause is not
39 subject to change under IC 24-4.5-1-106.
40 (ii) Twenty-five dollars ($25) on any installment or minimum
41 payment due that is not paid in full not later than ten (10) days
42 after its scheduled due date, if installments under the
HB 1174—LS 6725/DI 101 7
1 consumer loan, refinancing, or consolidation are due every
2 fifteen (15) days or more. The amount of twenty-five dollars
3 ($25) in this clause is not subject to change under
4 IC 24-4.5-1-106.
5 (iii) Twenty-five dollars ($25) on any installment or minimum
6 payment due that is not paid in full not later than ten (10) days
7 after its scheduled due date, in the case of a consumer loan,
8 refinancing, or consolidation that is payable in a single
9 installment that is due at least thirty (30) days after the
10 consumer loan, refinancing, or consolidation is made. The
11 amount of twenty-five dollars ($25) in this clause is not
12 subject to change under IC 24-4.5-1-106.
13 (2) A delinquency charge under this section may be collected only
14 once on an installment however long it remains in default. With regard
15 to a delinquency charge on consumer loans made under a revolving
16 loan account, the delinquency charge may be applied each month that
17 the payment is less than the minimum required payment on the
18 account. A delinquency charge may be collected any time after it
19 accrues. A delinquency charge may not be collected if:
20 (a) the installment has been deferred and a deferral charge
21 (IC 24-4.5-3-204) has been paid or incurred;
22 (b) a charge for a skip-a-payment service under
23 IC 24-4.5-3-202(1)(i) has been paid or incurred, as provided in
24 IC 24-4.5-3-202(1)(i)(iii); or
25 (c) a charge for an optional expedited payment service under
26 IC 24-4.5-3-202(1)(j) has been paid or incurred, as provided in
27 IC 24-4.5-3-202(1)(j)(v).
28 (3) A creditor may not, directly or indirectly, charge or collect a
29 delinquency charge on a payment that:
30 (a) is paid not later than ten (10) days after its scheduled due date;
31 and
32 (b) is otherwise a full payment of the payment due for the
33 applicable installment period;
34 if the only delinquency with respect to the consumer loan, refinancing,
35 or consolidation is attributable to a delinquency charge assessed on an
36 earlier installment.
37 (4) If two (2) or more installments, or parts of two (2) or more
38 installments, of a precomputed loan are in default for ten (10) days or
39 more, the lender may elect to convert the loan from a precomputed loan
40 to a loan in which the finance charge is based on unpaid balances. A
41 lender that makes this election shall make a rebate under the provisions
42 on rebates upon prepayment (IC 24-4.5-3-210) as of the maturity date
HB 1174—LS 6725/DI 101 8
1 of the first delinquent installment, and thereafter may make a loan
2 finance charge as authorized by the provisions on loan finance charges
3 for consumer loans (IC 24-4.5-3-201) or supervised loans
4 (IC 24-4.5-3-508). (section 508, 508.1, or 508.2 of this chapter, as
5 applicable). The amount of the rebate shall not be reduced by the
6 amount of any permitted minimum charge. (IC 24-4.5-3-210). Any
7 deferral charges made on installments due at or after the maturity date
8 of the first delinquent installment shall be rebated, and no further
9 deferral charges shall be made.
10 SECTION 3. IC 24-4.5-3-205, AS AMENDED BY P.L.85-2020,
11 SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
12 JULY 1, 2025]: Sec. 205. Loan Finance Charge on Refinancing —
13 With respect to a consumer loan, refinancing, or consolidation, the
14 lender may by agreement with the debtor refinance the unpaid balance
15 and may contract for and receive a loan finance charge based on the
16 principal resulting from the refinancing at a rate not exceeding that
17 permitted by the provisions on a loan finance charge for consumer
18 loans (IC 24-4.5-3-201) or the provisions on a loan finance charge for
19 supervised loans (IC 24-4.5-3-508), (section 508, 508.1, or 508.2 of
20 this chapter, as applicable), whichever is appropriate. For the purpose
21 of determining the loan finance charge permitted, the principal
22 resulting from the refinancing comprises the following:
23 (a) If:
24 (i) the transaction was not precomputed, the total of the unpaid
25 balance and the accrued charges on the date of the refinancing;
26 or
27 (ii) the transaction was precomputed, in the case of a
28 transaction entered into before July 1, 2020, the amount which
29 the debtor would have been required to pay upon prepayment
30 pursuant to the provisions on rebate upon prepayment
31 (IC 24-4.5-3-210) on the date of refinancing.
32 (b) Appropriate additional charges (IC 24-4.5-3-202), payment of
33 which is deferred.
34 SECTION 4. IC 24-4.5-3-206, AS AMENDED BY P.L.85-2020,
35 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
36 JULY 1, 2025]: Sec. 206. Loan Finance Charge on Consolidation —
37 (1) If a debtor owes an unpaid balance to a lender with respect to a
38 consumer loan, refinancing, or consolidation, and becomes obligated
39 on another consumer loan, refinancing, or consolidation with the same
40 lender, the parties may agree to a consolidation resulting in a single
41 schedule of payments. If the previous consumer loan, refinancing, or
42 consolidation was not precomputed, the parties may agree to add the
HB 1174—LS 6725/DI 101 9
1 unpaid amount of principal and accrued charges on the date of
2 consolidation to the principal with respect to the subsequent loan. If the
3 previous consumer loan, refinancing, or consolidation was
4 precomputed, in the case of a transaction entered into before July 1,
5 2020, the parties may agree to refinance the unpaid balance pursuant
6 to the provisions on refinancing (IC 24-4.5-3-205) and to consolidate
7 the principal resulting from the refinancing by adding it to the principal
8 with respect to the subsequent loan. In either case the lender may
9 contract for and receive a loan finance charge based on the aggregate
10 principal resulting from the consolidation at a rate not in excess of that
11 permitted by the provisions on loan finance charge for consumer loans
12 (IC 24-4.5-3-201) or the provisions on loan finance charge for
13 supervised loans (IC 24-4.5-3-508), (section 508, 508.1, or 508.2 of
14 this chapter, as applicable), whichever is appropriate.
15 (2) The parties may agree to consolidate the unpaid balance of a
16 consumer loan with the unpaid balance of a consumer credit sale. The
17 parties may agree to refinance the previous unpaid balance pursuant to
18 the provisions on refinancing sales (IC 24-4.5-2-205) or the provisions
19 on refinancing loans (IC 24-4.5-3-205), whichever is appropriate, and
20 to consolidate the amount financed resulting from the refinancing or
21 the principal resulting from the refinancing by adding it to the amount
22 financed or principal with respect to the subsequent sale or loan. The
23 aggregate amount resulting from the consolidation shall be deemed
24 principal, and the creditor may contract for and receive a loan finance
25 charge based on the principal at a rate not in excess of that permitted
26 by the provisions on loan finance charge for consumer loans
27 (IC 24-4.5-3-201) or the provisions on loan finance charge for
28 supervised loans (IC 24-4.5-3-508), (section 508, 508.1, or 508.2 of
29 this chapter, as applicable), whichever is appropriate.
30 SECTION 5. IC 24-4.5-3-208 IS AMENDED TO READ AS
31 FOLLOWS [EFFECTIVE JULY 1, 2025]: Sec. 208. Advances to
32 Perform Covenants of Debtor — (1) If the agreement with respect to a
33 consumer loan, refinancing, or consolidation contains covenants by the
34 debtor to perform certain duties pertaining to insuring or preserving
35 collateral and if the lender pursuant to the agreement pays for
36 performance of the duties on behalf of the debtor, the lender may add
37 the amounts paid to the debt. Within a reasonable time after advancing
38 any sums, he the lender shall state to the debtor in writing the amount
39 of the sums advanced, any charges with respect to this amount, and any
40 revised payment schedule and, if the duties of the debtor performed by
41 the lender pertain to insurance, a brief description of the insurance paid
42 for by the lender including the type and amount of coverages. No
HB 1174—LS 6725/DI 101 10
1 further information need be given.
2 (2) A loan finance charge may be made for sums advanced pursuant
3 to subsection (1) at a rate not exceeding the rate stated to the debtor
4 pursuant to the provisions on disclosure (Part 3) with respect to the
5 loan, refinancing, or consolidation, except that with respect to a
6 revolving loan account the amount of the advance may be added to the
7 unpaid balance of the debt and the lender may make a loan finance
8 charge not exceeding that permitted by the provisions on loan finance
9 charge for consumer loans (IC 24-4.5-3-201) or for supervised loans
10 (24-4.5-3-508), (section 508, 508.1, or 508.2 of this chapter, as
11 applicable), whichever is appropriate.
12 SECTION 6. IC 24-4.5-3-210, AS AMENDED BY P.L.85-2020,
13 SECTION 15, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
14 JULY 1, 2025]: Sec. 210. Rebate upon Prepayment — (1) Except for
15 subsections (2) and (9), this section applies only to a loan agreement
16 entered into before July 1, 2020. Except as provided in subsection (2),
17 upon prepayment in full of the unpaid balance of a precomputed
18 consumer loan, refinancing, or consolidation, an amount not less than
19 the unearned portion of the loan finance charge calculated according
20 to this section shall be rebated to the debtor. If the rebate otherwise
21 required is less than one dollar ($1), no rebate need be made.
22 (2) Upon prepayment in full of a consumer loan, refinancing, or
23 consolidation, other than one (1) under a revolving loan account, if the
24 loan finance charge earned is less than any permitted minimum loan
25 finance charge (IC 24-4.5-3-201(7), or IC 24-4.5-3-508(7)) or section
26 508(7), 508.1(7), or 508.2(5) of this chapter, as applicable)
27 contracted for, whether or not the consumer loan, refinancing, or
28 consolidation is precomputed, the lender may collect or retain the
29 minimum loan finance charge, as if earned, not exceeding the loan
30 finance charge contracted for.
31 (3) The unearned portion of the loan finance charge is a fraction of
32 the loan finance charge of which the numerator is the sum of the
33 periodic balances scheduled to follow the computational period in
34 which prepayment occurs, and the denominator is the sum of all
35 periodic balances under either the loan agreement or, if the balance
36 owing resulted from a refinancing (IC 24-4.5-3-205) or a consolidation
37 (IC 24-4.5-3-206), under the refinancing agreement or consolidation
38 agreement.
39 (4) In this section:
40 (a) "periodic balance" means the amount scheduled to be
41 outstanding on the last day of a computational period before
42 deducting the payment, if any, scheduled to be made on that day;
HB 1174—LS 6725/DI 101 11
1 (b) "computation period" means one (1) month if one-half (1/2)
2 or more of the intervals between scheduled payments under the
3 agreement is one (1) month or more, and otherwise means one (1)
4 week;
5 (c) the "interval" to the due date of the first scheduled installment
6 or the final scheduled payment date is measured from the date of
7 a loan, refinancing, or consolidation, and includes either the first
8 or last day of the interval; and
9 (d) if the interval to the due date of the first scheduled installment
10 does not exceed one (1) month by more than fifteen (15) days
11 when the computational period is one (1) month, or eleven (11)
12 days when the computational period is one (1) week, the interval
13 shall be considered as one (1) computational period.
14 (5) This subsection applies only if the schedule of payments is not
15 regular.
16 (a) If the computational period is one (1) month and:
17 (i) if the number of days in the interval to the due date of the
18 first scheduled installment is less than one (1) month by more
19 than five (5) days, or more than one (1) month by more than
20 five (5) but not more than fifteen (15) days, the unearned loan
21 finance charge shall be increased by an adjustment for each
22 day by which the interval is less than one (1) month and, at the
23 option of the lender, may be reduced by an adjustment for each
24 day by which the interval is more than one (1) month; the
25 adjustment for each day shall be one-thirtieth (1/30) of that
26 part of the loan finance charge earned in the computational
27 period prior to the due date of the first scheduled installment
28 assuming that period to be one (1) month; and
29 (ii) if the interval to the final scheduled payment date is a
30 number of computational periods plus an additional number of
31 days less than a full month, the additional number of days shall
32 be considered a computational period only if sixteen (16) days
33 or more. This clause applies whether or not clause (i) applies.
34 (b) Notwithstanding subdivision (a), if the computational period
35 is one (1) month, the number of days in the interval to the due
36 date of the first installment exceeds one (1) month by not more
37 than fifteen (15) days, and the schedule of payments is otherwise
38 regular, the lender, at the lender's option, may exclude the extra
39 days and the charge for the extra days in computing the unearned
40 loan finance charge; but if the lender does so and a rebate is
41 required before the due date of the first scheduled installment, the
42 lender shall compute the earned charge for each elapsed day as
HB 1174—LS 6725/DI 101 12
1 one-thirtieth (1/30) of the amount the earned charge would have
2 been if the first interval had been one (1) month.
3 (c) If the computational period is one (1) week and:
4 (i) if the number of days in the interval to the due date of the
5 first scheduled installment is less than five (5) days, or more
6 than nine (9) days, but not more than eleven (11) days, the
7 unearned loan finance charge shall be increased by an
8 adjustment for each day by which the interval is less than
9 seven (7) days and, at the option of the lender, may be reduced
10 by an adjustment for each day by which the interval is more
11 than seven (7) days; the adjustment for each day shall be
12 one-seventh (1/7) of that part of the loan finance charge earned
13 in the computational period prior to the due date of the first
14 scheduled installment, assuming that period to be one (1)
15 week; and
16 (ii) if the interval to the final scheduled payment date is a
17 number of computational periods plus an additional number of
18 days less than a full week, the additional number of days shall
19 be considered a computational period only if five (5) days or
20 more. This clause applies whether or not clause (i) applies.
21 (6) If a deferral (IC 24-4.5-3-204) has been agreed to, the unearned
22 portion of the loan finance charge shall be computed without regard to
23 the deferral. The amount of deferral charge earned at the date of
24 prepayment shall also be calculated. If the deferral charge earned is
25 less than the deferral charge paid, the difference shall be added to the
26 unearned portion of the loan finance charge. If any part of a deferral
27 charge has been earned but has not been paid, that part shall be
28 subtracted from the unearned portion of the loan finance charge or shall
29 be added to the unpaid balance.
30 (7) This section does not preclude the collection or retention by the
31 lender of delinquency charges (IC 24-4.5-3-203.5).
32 (8) If the maturity is accelerated for any reason and judgment is
33 obtained, the debtor is entitled to the same rebate as if payment had
34 been made on the date judgment is entered.
35 (9) Upon prepayment in full of a consumer loan by the proceeds of
36 consumer credit insurance (as defined in IC 24-4.5-4-103), the debtor
37 or the debtor's estate shall pay the same loan finance charge or receive
38 the same rebate as though the debtor had prepaid the agreement on the
39 date the proceeds of the insurance are paid to the lender, but no later
40 than ten (10) business days after satisfactory proof of loss is furnished
41 to the lender. This subsection applies whether or not the loan is
42 precomputed.
HB 1174—LS 6725/DI 101 13
1 (10) Upon prepayment in full of a transaction with a term of more
2 than sixty-one (61) months, the unearned loan finance charge shall be
3 computed by applying the disclosed annual percentage rate that would
4 yield the loan finance charge originally contracted for to the unpaid
5 balances of the amount financed for the full computational periods
6 following the prepayment, as originally scheduled or as deferred.
7 SECTION 7. IC 24-4.5-3-501, AS AMENDED BY P.L.91-2013,
8 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
9 JULY 1, 2025]: Sec. 501. Definitions:
10 (1) "Supervised loan" means a consumer loan in which the rate of
11 the loan finance charge exceeds twenty-five percent (25%) thirty-six
12 percent (36%) per year as determined according to the provisions on
13 loan finance charge for consumer loans in section 201 of this chapter.
14 (2) "Supervised lender" means a person authorized to make or take
15 assignments of supervised loans.
16 SECTION 8. IC 24-4.5-3-505, AS AMENDED BY P.L.197-2023,
17 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
18 JULY 1, 2025]: Sec. 505. (1) Every creditor required to be licensed
19 under this article shall maintain records in conformity with United
20 States generally accepted accounting principles and practices, or in any
21 other form that may be preapproved at the discretion of the director, in
22 a manner that will enable the department to determine whether the
23 licensee is complying with the provisions of this article. The record
24 keeping system of a licensee shall be sufficient if the licensee makes
25 the required information reasonably available. The department shall
26 determine the sufficiency of the records and whether the licensee has
27 made the required information reasonably available. The department
28 shall be given free access to the records wherever located. The records
29 pertaining to any loan shall be retained for two (2) years after making
30 the final entry relating to the loan, but in the case of a revolving loan
31 account the two (2) years is measured from the date of each entry. A
32 person licensed or required to be licensed under this chapter is subject
33 to IC 28-1-2-30.5 with respect to any records maintained by the person.
34 A person that is exempt (either under this article or under
35 IC 24-4.4-1-202(b)(8)) from licensing and that sponsors one (1) or
36 more licensed mortgage loan originators as permitted by
37 IC 24-4.4-1-202(b)(8) or by 750 IAC 9, shall:
38 (a) cooperate with the department; and
39 (b) provide access to records and documents;
40 as required by the department in carrying out examinations of the
41 activities of the licensed mortgage loan originators sponsored by the
42 person.
HB 1174—LS 6725/DI 101 14
1 (2) The unique identifier of any person originating a mortgage
2 transaction must be clearly shown on all mortgage transaction
3 application forms and any other documents as required by the director.
4 (3) Every licensee that engages in mortgage transactions shall use
5 automated examination and regulatory software designated by the
6 director, including third party software. Use of the software consistent
7 with guidance documents and policies issued by the director is not a
8 violation of IC 28-1-2-30.
9 (4) Each:
10 (a) creditor that is licensed by the department to engage in
11 mortgage transactions; and
12 (b) person that is exempt (either under this article or under
13 IC 24-4.4-1-202(b)(8)) from licensing and that:
14 (i) employs one (1) or more licensed mortgage loan
15 originators; or
16 (ii) sponsors one (1) or more licensed mortgage loan
17 originators as permitted by IC 24-4.4-1-202(b)(8) or by 750
18 IAC 9;
19 shall submit to the NMLSR a call report, which must be in the form
20 and contain information the NMLSR requires.
21 (5) Every creditor required to be licensed under this article shall file
22 with the department a composite report as required by the department,
23 but not more frequently than annually, in the form prescribed by the
24 department relating to all consumer loans made by the licensee. The
25 department shall consult with comparable officials in other states for
26 the purpose of making the kinds of information required in the reports
27 uniform among the states. Information contained in the reports shall be
28 confidential and may be published only in composite form. The
29 department may impose a fee in an amount fixed by the department
30 under IC 28-11-3-5 for each day that a creditor fails to file the report
31 required by this subsection.
32 (6) Based on the information contained in the composite reports
33 filed with the department under subsection (5), the department
34 shall publish on the department's website, on an annual basis, a
35 report that contains the following information, in composite form,
36 concerning supervised loans made under section 508.1 of this
37 chapter after June 30, 2025, by nondepository licensees during the
38 reporting period covered by the composite reports filed under
39 subsection (5):
40 (a) The total number of supervised loans made during the
41 reporting period, categorized by the following ranges of the
42 principal (as defined in section 107(3) of this chapter) of the
HB 1174—LS 6725/DI 101 15
1 supervised loans:
2 (i) Supervised loans with a principal that is two thousand
3 dollars ($2,000) or less.
4 (ii) Supervised loans with a principal that is more than two
5 thousand dollars ($2,000) but does not exceed four
6 thousand dollars ($4,000).
7 (iii) Supervised loans with a principal that is more than
8 four thousand dollars ($4,000) but does not exceed ten
9 thousand dollars ($10,000).
10 (iv) Supervised loans with a principal that is more than ten
11 thousand dollars ($10,000).
12 (b) For each range of principal identified under subdivision
13 (a), the aggregate dollar amount of the supervised loans made
14 in that range during the reporting period.
15 (c) For the data reported in each range of principal under
16 subdivisions (a) and (b), the change in the reported data for
17 the reporting period as compared to the corresponding
18 reported data in the immediately preceding reporting period.
19 (7) Based on the information contained in the composite reports
20 filed with the department under subsection (5), the department
21 shall publish on the department's website, on an annual basis, a
22 report that contains the following information, in composite form,
23 concerning supervised loans made under section 508.2 of this
24 chapter after June 30, 2025, by nondepository licensees during the
25 reporting period covered by the composite reports filed under
26 subsection (5):
27 (a) The total number of supervised loans made during the
28 reporting period, categorized by the following ranges of the
29 principal (as defined in section 107(3) of this chapter) of the
30 supervised loans:
31 (i) Supervised loans with a principal that is more than five
32 thousand dollars ($5,000) but does not exceed ten thousand
33 dollars ($10,000).
34 (ii) Supervised loans with a principal that is more than ten
35 thousand dollars ($10,000) but does not exceed fifteen
36 thousand dollars ($15,000).
37 (iii) Supervised loans with a principal that is more than
38 fifteen thousand dollars ($15,000) but does not exceed
39 twenty-five thousand dollars ($25,000).
40 (b) For each range of principal identified under subdivision
41 (a), the aggregate dollar amount of the supervised loans made
42 in that range during the reporting period.
HB 1174—LS 6725/DI 101 16
1 (c) For the data reported in each range of principal under
2 subdivisions (a) and (b), the change in the reported data for
3 the reporting period as compared to the corresponding
4 reported data in the immediately preceding reporting period.
5 (6) (8) A creditor required to be licensed under this article shall file
6 notification with the department if the licensee:
7 (a) has a change in name, address, or principals;
8 (b) opens a new branch, closes an existing branch, or relocates an
9 existing branch;
10 (c) files for bankruptcy or reorganization; or
11 (d) is subject to revocation or suspension proceedings by a state
12 or governmental authority with regard to the licensee's activities;
13 not later than thirty (30) days after the date of the event described in
14 this subsection.
15 (7) (9) Every licensee shall file notification with the department if
16 the licensee or any director, executive officer, or manager of the
17 licensee has been convicted of a felony under the laws of Indiana or
18 any other jurisdiction. The licensee shall file the notification required
19 by this subsection not later than thirty (30) days after the date of the
20 event described in this subsection.
21 SECTION 9. IC 24-4.5-3-508, AS AMENDED BY P.L.29-2022,
22 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
23 JULY 1, 2025]: Sec. 508. Loan Finance Charge for Supervised Loans
24 ) (1) This section applies only to the following:
25 (a) A supervised loan entered into before July 1, 2025.
26 (b) A supervised loan that is secured by:
27 (i) an interest in land; or
28 (ii) personal property used or expected to be used as the
29 principal dwelling of the debtor;
30 regardless of when the supervised loan is entered into.
31 With respect to a supervised loan, including a loan pursuant to a
32 revolving loan account, a supervised lender may contract for and
33 receive a loan finance charge not exceeding that permitted by this
34 section.
35 (2) The loan finance charge, calculated according to the actuarial
36 method, may not exceed the equivalent of the greater of:
37 (a) the total of:
38 (i) thirty-six percent (36%) per year on that part of the unpaid
39 balances of the principal (as defined in section 107(3) of this
40 chapter) which is two thousand dollars ($2,000) or less;
41 (ii) twenty-one percent (21%) per year on that part of the
42 unpaid balances of the principal (as defined in section 107(3)
HB 1174—LS 6725/DI 101 17
1 of this chapter) which is more than two thousand dollars
2 ($2,000) but does not exceed four thousand dollars ($4,000);
3 and
4 (iii) fifteen percent (15%) per year on that part of the unpaid
5 balances of the principal (as defined in section 107(3) of this
6 chapter) which is more than four thousand dollars ($4,000); or
7 (b) twenty-five percent (25%) per year on the unpaid balances of
8 the principal (as defined in section 107(3) of this chapter).
9 (3) In the case of a loan agreement entered into before July 1, 2020,
10 this section does not limit or restrict the manner of contracting for the
11 loan finance charge, whether by way of add-on, discount, or otherwise,
12 so long as the rate of the loan finance charge does not exceed that
13 permitted by this section. If the loan is precomputed:
14 (a) the loan finance charge may be calculated on the assumption
15 that all scheduled payments will be made when due; and
16 (b) the effect of prepayment is governed by the provisions on
17 rebate upon prepayment in section 210 of this chapter.
18 After June 30, 2020, a loan agreement may not be entered into for a
19 precomputed supervised loan. The loan finance charge authorized by
20 this section must be contracted for between the lender and the debtor,
21 and must be calculated by applying a rate not exceeding the rate set
22 forth in subsection (2) to unpaid balances of the principal (as defined
23 in section 107(3) of this chapter).
24 (4) The term of a loan for the purposes of this section commences
25 on the date the loan is made. Differences in the lengths of months are
26 disregarded, and a day may be counted as one-thirtieth (1/30) of a
27 month. Subject to classifications and differentiations the lender may
28 reasonably establish, a part of a month in excess of fifteen (15) days
29 may be treated as a full month if periods of fifteen (15) days or less are
30 disregarded and that procedure is not consistently used to obtain a
31 greater yield than would otherwise be permitted.
32 (5) Subject to classifications and differentiations the lender may
33 reasonably establish, the lender may make the same loan finance
34 charge on all principal amounts within a specified range. A loan
35 finance charge does not violate subsection (2) if:
36 (a) when applied to the median amount within each range, it does
37 not exceed the maximum permitted in subsection (2); and
38 (b) when applied to the lowest amount within each range, it does
39 not produce a rate of loan finance charge exceeding the rate
40 calculated according to subdivision (a) by more than eight percent
41 (8%) of the rate calculated according to subdivision (a).
42 (6) The amounts of two thousand dollars ($2,000) and four thousand
HB 1174—LS 6725/DI 101 18
1 dollars ($4,000) in subsection (2) and thirty dollars ($30) in subsection
2 (7) are subject to change pursuant to the provisions on adjustment of
3 dollar amounts (IC 24-4.5-1-106). However, notwithstanding
4 IC 24-4.5-1-106(1), for the adjustment of the amount of thirty dollars
5 ($30), the Reference Base Index to be used is the Index for October
6 1992. Notwithstanding IC 24-4.5-1-106(1), for the adjustment of the
7 amounts of two thousand dollars ($2,000) and four thousand dollars
8 ($4,000), the Reference Base Index to be used is the Index for October
9 2012.
10 (7) With respect to a supervised loan not made pursuant to a
11 revolving loan account, the lender may contract for and receive a
12 minimum loan finance charge of not more than thirty dollars ($30). The
13 minimum loan finance charge allowed under this subsection may be
14 imposed only if the lender does not assess a nonrefundable prepaid
15 finance charge under subsection (8) and:
16 (a) the debtor prepays in full a consumer loan, refinancing, or
17 consolidation, regardless of whether the loan, refinancing, or
18 consolidation is precomputed;
19 (b) the loan, refinancing, or consolidation prepaid by the debtor
20 is subject to a loan finance charge that:
21 (i) is contracted for by the parties; and
22 (ii) does not exceed the rate prescribed in subsection (2); and
23 (c) the loan finance charge earned at the time of prepayment is
24 less than the minimum loan finance charge contracted for under
25 this subsection.
26 (8) Except as provided in subsections (7) and (10)(c), in addition to
27 the loan finance charge provided for in this section and to any other
28 charges and fees permitted by this chapter, the lender may contract for
29 and receive a nonrefundable prepaid finance charge of not more than
30 fifty dollars ($50) if the loan agreement is entered into before July 1,
31 2020, or, if the loan agreement is entered into after June 30, 2020, not
32 more than the following:
33 (a) Seventy-five dollars ($75), in the case of a loan agreement for
34 a principal amount which is two thousand dollars ($2,000) or less.
35 (b) One hundred fifty dollars ($150) in the case of a loan
36 agreement for a principal amount which is more than two
37 thousand dollars ($2,000) but does not exceed four thousand
38 dollars ($4,000).
39 (c) Two hundred dollars ($200) in the case of a loan agreement
40 for a principal amount which is more than four thousand dollars
41 ($4,000).
42 The amounts in this subsection are not subject to change under
HB 1174—LS 6725/DI 101 19
1 IC 24-4.5-1-106.
2 (9) The nonrefundable prepaid finance charge provided for in
3 subsection (8) is not subject to refund or rebate. However, for any
4 supervised loan entered into after June 30, 2020, any amount charged
5 by the lender, other than by a lender that is a depository institution (as
6 defined in IC 24-4.5-1-301.5(12)), under subsection (8) that exceeds
7 the applicable amount permitted by subsection (8) constitutes a
8 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
9 refund. Any amount charged by a depository institution (as defined in
10 IC 24-4.5-1-301.5(12)) under subsection (8) that exceeds the applicable
11 amount set forth in subsection (8) is subject to refund.
12 (10) Notwithstanding subsections (8) and (9), in the case of a
13 supervised loan that is not secured by an interest in land, if a lender
14 retains any part of a nonrefundable prepaid finance charge charged on
15 a loan that is paid in full by a new loan from the same lender, the
16 following apply:
17 (a) If the loan is paid in full by the new loan within three (3)
18 months after the date of the prior loan, the lender may not charge
19 a nonrefundable prepaid finance charge on the new loan, or, in the
20 case of a revolving loan, on the increased credit line.
21 (b) The lender may not assess more than two (2) nonrefundable
22 prepaid finance charges in any twelve (12) month period.
23 (c) Subject to subdivisions (a) and (b), if a supervised loan that is
24 entered into by a lender and a debtor before July 1, 2020, is paid
25 in full by a new supervised loan from the same lender after June
26 30, 2020, the lender may contract for and receive a nonrefundable
27 prepaid finance charge in the amount set forth in subsection (8)
28 for loan agreements entered into after June 30, 2020.
29 (11) In the case of a supervised loan that is secured by an interest in
30 land, this section does not prohibit a lender from contracting for and
31 receiving a fee for preparing deeds, mortgages, reconveyances, and
32 similar documents under section 202(1)(d)(ii) of this chapter, in
33 addition to the nonrefundable prepaid finance charge provided for in
34 subsection (8).
35 SECTION 10. IC 24-4.5-3-508.1 IS ADDED TO THE INDIANA
36 CODE AS A NEW SECTION TO READ AS FOLLOWS
37 [EFFECTIVE JULY 1, 2025]: Sec. 508.1. (1) This section applies
38 only to a supervised loan that:
39 (a) is entered into after June 30, 2025;
40 (b) is not secured by:
41 (i) an interest in land; or
42 (ii) personal property used or expected to be used as the
HB 1174—LS 6725/DI 101 20
1 principal dwelling of the debtor; and
2 (c) is not described in section 508.2 of this chapter.
3 With respect to a supervised loan to which this section applies,
4 including a loan pursuant to a revolving loan account, a supervised
5 lender may contract for and receive a loan finance charge not
6 exceeding that permitted by this section.
7 (2) The loan finance charge, calculated according to the
8 actuarial method, may not exceed the equivalent of the greater of:
9 (a) the total of:
10 (i) thirty-six percent (36%) per year on that part of the
11 unpaid balances of the principal (as defined in section
12 107(3) of this chapter) which is two thousand dollars
13 ($2,000) or less;
14 (ii) twenty-one percent (21%) per year on that part of the
15 unpaid balances of the principal (as defined in section
16 107(3) of this chapter) which is more than two thousand
17 dollars ($2,000) but does not exceed four thousand dollars
18 ($4,000); and
19 (iii) fifteen percent (15%) per year on that part of the
20 unpaid balances of the principal (as defined in section
21 107(3) of this chapter) which is more than four thousand
22 dollars ($4,000); or
23 (b) twenty-five percent (25%) per year on the unpaid balances
24 of the principal (as defined in section 107(3) of this chapter).
25 (3) A loan agreement may not be entered into for a precomputed
26 supervised loan. The loan finance charge authorized by this section
27 must be contracted for between the lender and the debtor, and
28 must be calculated by applying a rate not exceeding the rate set
29 forth in subsection (2) to unpaid balances of the principal (as
30 defined in section 107(3) of this chapter).
31 (4) The term of a loan for the purposes of this section
32 commences on the date the loan is made. Differences in the lengths
33 of months are disregarded, and a day may be counted as
34 one-thirtieth (1/30) of a month. Subject to classifications and
35 differentiations the lender may reasonably establish, a part of a
36 month in excess of fifteen (15) days may be treated as a full month
37 if periods of fifteen (15) days or less are disregarded and that
38 procedure is not consistently used to obtain a greater yield than
39 would otherwise be permitted.
40 (5) Subject to classifications and differentiations the lender may
41 reasonably establish, the lender may make the same loan finance
42 charge on all principal amounts within a specified range. A loan
HB 1174—LS 6725/DI 101 21
1 finance charge does not violate subsection (2) if:
2 (a) when applied to the median amount within each range, it
3 does not exceed the maximum permitted in subsection (2); and
4 (b) when applied to the lowest amount within each range, it
5 does not produce a rate of loan finance charge exceeding the
6 rate calculated according to subdivision (a) by more than
7 eight percent (8%) of the rate calculated according to
8 subdivision (a).
9 (6) The amounts of two thousand dollars ($2,000) and four
10 thousand dollars ($4,000) in subsection (2) and thirty dollars ($30)
11 in subsection (7) are subject to change pursuant to the provisions
12 on adjustment of dollar amounts (IC 24-4.5-1-106). However,
13 notwithstanding IC 24-4.5-1-106(1), for the adjustment of the
14 amount of thirty dollars ($30), the Reference Base Index to be used
15 is the Index for October 1992. Notwithstanding IC 24-4.5-1-106(1),
16 for the adjustment of the amounts of two thousand dollars ($2,000)
17 and four thousand dollars ($4,000), the Reference Base Index to be
18 used is the Index for October 2012.
19 (7) With respect to a supervised loan not made pursuant to a
20 revolving loan account, the lender may contract for and receive a
21 minimum loan finance charge of not more than thirty dollars ($30).
22 The minimum loan finance charge allowed under this subsection
23 may be imposed only if the lender does not assess a nonrefundable
24 prepaid finance charge under subsection (9) and:
25 (a) the debtor prepays in full a supervised loan, refinancing,
26 or consolidation;
27 (b) the loan, refinancing, or consolidation prepaid by the
28 debtor is subject to a loan finance charge that:
29 (i) is contracted for by the parties; and
30 (ii) does not exceed the rate prescribed in subsection (2);
31 and
32 (c) the loan finance charge earned at the time of prepayment
33 is less than the minimum loan finance charge contracted for
34 under this subsection.
35 (8) In addition to the loan finance charge provided for in this
36 section and any other charges and fees permitted by this chapter,
37 the lender may contract for and receive a monthly service fee if:
38 (a) the amount of principal (as defined in section 107(3) of this
39 chapter) originally contracted for does not exceed five
40 thousand dollars ($5,000); and
41 (b) the monthly service fee, based on the amount of principal
42 (as defined in section 107(3) of this chapter) originally
HB 1174—LS 6725/DI 101 22
1 contracted for, does not exceed the following:
2 (i) Six percent (6%) per month for an original principal
3 amount that is two thousand five hundred dollars ($2,500)
4 or less.
5 (ii) Five percent (5%) per month for an original principal
6 amount that is more than two thousand five hundred
7 dollars ($2,500) but does not exceed four thousand dollars
8 ($4,000).
9 (iii) Three percent (3%) per month for an original
10 principal amount that is more than four thousand dollars
11 ($4,000) but does not exceed five thousand dollars ($5,000).
12 (9) Except as provided in subsection (7), in addition to the loan
13 finance charge provided for in this section and to any other charges
14 and fees permitted by this chapter, the lender may contract for and
15 receive a nonrefundable prepaid finance charge of not more than
16 the following:
17 (a) Seventy-five dollars ($75), in the case of a loan agreement
18 for a principal amount that is two thousand dollars ($2,000)
19 or less.
20 (b) One hundred fifty dollars ($150) in the case of a loan
21 agreement for a principal amount that is more than two
22 thousand dollars ($2,000) but does not exceed four thousand
23 dollars ($4,000).
24 (c) Two hundred dollars ($200) in the case of a loan
25 agreement for a principal amount that is more than four
26 thousand dollars ($4,000).
27 The amounts in this subsection are not subject to change under
28 IC 24-4.5-1-106.
29 (10) The nonrefundable prepaid finance charge provided for in
30 subsection (9) is not subject to refund or rebate. However, any
31 amount charged by the lender, other than by a lender that is a
32 depository institution (as defined in IC 24-4.5-1-301.5(12)), under
33 subsection (9) that exceeds the applicable amount permitted by
34 subsection (9) constitutes a violation of this article under
35 IC 24-4.5-6-107.5(l) and is subject to refund. Any amount charged
36 by a depository institution (as defined in IC 24-4.5-1-301.5(12))
37 under subsection (9) that exceeds the applicable amount set forth
38 in subsection (9) is subject to refund.
39 (11) Notwithstanding subsections (9) and (10), in the case of a
40 supervised loan to which this section applies, if a lender retains any
41 part of a nonrefundable prepaid finance charge charged on a
42 supervised loan that is paid in full by a new loan from the same
HB 1174—LS 6725/DI 101 23
1 lender, the following apply:
2 (a) If the loan is paid in full by the new loan within three (3)
3 months after the date of the prior loan, the lender may not
4 charge a nonrefundable prepaid finance charge on the new
5 loan, or, in the case of a revolving loan, on the increased credit
6 line.
7 (b) The lender may not assess more than two (2)
8 nonrefundable prepaid finance charges in any twelve (12)
9 month period.
10 (c) Subject to subdivisions (a) and (b), if a supervised loan that
11 is entered into by a lender and a debtor under section 508 of
12 this chapter before July 1, 2020, is paid in full by a new
13 supervised loan under this section from the same lender after
14 June 30, 2025, the lender may contract for and receive a
15 nonrefundable prepaid finance charge in the amount set forth
16 in subsection (9).
17 (12) With respect to a supervised loan made under this section,
18 a lender must report the borrower's payments on the supervised
19 loan to at least one (1) consumer reporting agency that compiles
20 and maintains files on consumers on a nationwide basis (as defined
21 in 15 U.S.C. 1681a(p)) in accordance with the federal Fair Credit
22 Reporting Act (15 U.S.C. 1681 et seq.).
23 SECTION 11. IC 24-4.5-3-508.2 IS ADDED TO THE INDIANA
24 CODE AS A NEW SECTION TO READ AS FOLLOWS
25 [EFFECTIVE JULY 1, 2025]: Sec. 508.2. (1) This section applies
26 only to a supervised loan that:
27 (a) is entered into after June 30, 2025;
28 (b) is not secured by:
29 (i) an interest in land; or
30 (ii) personal property used or expected to be used as the
31 principal dwelling of the debtor;
32 (c) has a principal (as defined in section 107(3) of this chapter)
33 that is more than five thousand dollars ($5,000) but does not
34 exceed twenty-five thousand dollars ($25,000);
35 (d) is for a term of at least six (6) months;
36 (e) is repayable in monthly installments;
37 (f) requires the lender to report the borrower's payments on
38 the loan to at least one (1) consumer reporting agency that
39 compiles and maintains files on consumers on a nationwide
40 basis (as defined in 15 U.S.C. 1681a(p)), as set forth in
41 subsection (9); and
42 (g) includes a consumer credit education program that is
HB 1174—LS 6725/DI 101 24
1 offered to the borrower at no cost at or before consummation
2 of the loan, as described in subsection (10).
3 (2) With respect to a supervised loan to which this section
4 applies, including a loan pursuant to a revolving loan account, a
5 supervised lender may contract for and receive a loan finance
6 charge not exceeding thirty-six percent (36%) per year on the
7 unpaid balances of the principal (as defined in section 107(3) of this
8 chapter).
9 (3) A loan agreement may not be entered into for a precomputed
10 supervised loan. The loan finance charge authorized by this section
11 must be contracted for between the lender and the debtor, and
12 must be calculated by applying a rate not exceeding the rate set
13 forth in subsection (2) to unpaid balances of the principal (as
14 defined in section 107(3) of this chapter).
15 (4) The term of a loan for the purposes of this section
16 commences on the date the loan is made. Differences in the lengths
17 of months are disregarded, and a day may be counted as
18 one-thirtieth (1/30) of a month. Subject to classifications and
19 differentiations the lender may reasonably establish, a part of a
20 month in excess of fifteen (15) days may be treated as a full month
21 if periods of fifteen (15) days or less are disregarded and that
22 procedure is not consistently used to obtain a greater yield than
23 would otherwise be permitted.
24 (5) With respect to a supervised loan not made pursuant to a
25 revolving loan account, the lender may contract for and receive a
26 minimum loan finance charge of not more than thirty dollars ($30).
27 The minimum loan finance charge allowed under this subsection
28 may be imposed only if the lender does not assess a nonrefundable
29 prepaid finance charge under subsection (6) and:
30 (a) the debtor prepays in full a supervised loan, refinancing,
31 or consolidation;
32 (b) the loan, refinancing, or consolidation prepaid by the
33 debtor is subject to a loan finance charge that:
34 (i) is contracted for by the parties; and
35 (ii) does not exceed the rate prescribed in subsection (2);
36 and
37 (c) the loan finance charge earned at the time of prepayment
38 is less than the minimum loan finance charge contracted for
39 under this subsection.
40 The amounts of five thousand dollars ($5,000) and twenty-five
41 thousand dollars ($25,000) in subsection (1) and thirty dollars ($30)
42 in this subsection are subject to change pursuant to the provisions
HB 1174—LS 6725/DI 101 25
1 on adjustment of dollar amounts (IC 24-4.5-1-106). However,
2 notwithstanding IC 24-4.5-1-106(1), for the adjustment of the
3 amount of thirty dollars ($30), the Reference Base Index to be used
4 is the Index for October 1992. Notwithstanding IC 24-4.5-1-106(1),
5 for the adjustment of the amounts of five thousand dollars ($5,000)
6 and twenty-five thousand dollars ($25,000), the Reference Base
7 Index to be used is the Index for October 2012.
8 (6) Except as provided in subsection (5), in addition to the loan
9 finance charge provided for in this section and to any other charges
10 and fees permitted by this chapter, the lender may contract for and
11 receive a nonrefundable prepaid finance charge of not more than
12 two hundred dollars ($200). The amount of two hundred dollars
13 ($200) in this subsection is not subject to change under
14 IC 24-4.5-1-106.
15 (7) The nonrefundable prepaid finance charge provided for in
16 subsection (6) is not subject to refund or rebate. However, any
17 amount charged by the lender, other than by a lender that is a
18 depository institution (as defined in IC 24-4.5-1-301.5(12)), under
19 subsection (6) that exceeds the amount permitted by subsection (6)
20 constitutes a violation of this article under IC 24-4.5-6-107.5(l) and
21 is subject to refund. Any amount charged by a depository
22 institution (as defined in IC 24-4.5-1-301.5(12)) under subsection
23 (6) that exceeds the amount set forth in subsection (6) is subject to
24 refund.
25 (8) Notwithstanding subsections (6) and (7), in the case of a
26 supervised loan to which this section applies, if a lender retains any
27 part of a nonrefundable prepaid finance charge charged on a
28 supervised loan that is paid in full by a new loan from the same
29 lender, the following apply:
30 (a) If the loan is paid in full by the new loan within three (3)
31 months after the date of the prior loan, the lender may not
32 charge a nonrefundable prepaid finance charge on the new
33 loan, or, in the case of a revolving loan, on the increased credit
34 line.
35 (b) The lender may not assess more than two (2)
36 nonrefundable prepaid finance charges in any twelve (12)
37 month period.
38 (c) Subject to subdivisions (a) and (b), if a supervised loan that
39 is entered into by a lender and a debtor under section 508 of
40 this chapter before July 1, 2020, is paid in full by a new
41 supervised loan from the same lender under this section after
42 June 30, 2025, the lender may contract for and receive a
HB 1174—LS 6725/DI 101 26
1 nonrefundable prepaid finance charge in the amount set forth
2 in subsection (6).
3 (9) With respect to a supervised loan made under this section,
4 a lender must report the borrower's payments on the supervised
5 loan to at least one (1) consumer reporting agency that compiles
6 and maintains files on consumers on a nationwide basis (as defined
7 in 15 U.S.C. 1681a(p)) in accordance with the federal Fair Credit
8 Reporting Act (15 U.S.C. 1681 et seq.).
9 (10) At or before the consummation of a supervised loan to
10 which this section applies, the lender shall offer to the borrower, at
11 no cost to the borrower, a consumer credit education program
12 provided by the lender or a third party provider. The program
13 may be provided in written form or through an online platform
14 and may include instruction on one (1) or more of the following
15 topics:
16 (a) The importance of and methods for establishing a
17 household budget.
18 (b) The impact and value of and ways to improve a credit
19 score.
20 (c) The importance of and methods for establishing household
21 savings.
22 (d) How to obtain a free copy of a consumer report (as defined
23 in 15 U.S.C. 1681a(d)).
24 (e) How to dispute an error in a consumer report (as defined
25 in 15 U.S.C. 1681a(d)).
26 (f) Ways to manage and prevent identity theft.
27 (g) Other similar topics concerning consumer credit or
28 personal finance.
29 A lender may not require a borrower to participate in a consumer
30 credit education program as a condition for the extension of credit
31 under this section.
32 SECTION 12. IC 24-4.5-3-602, AS AMENDED BY P.L.69-2018,
33 SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
34 JULY 1, 2025]: Sec. 602. (1) A "consumer related loan" is a loan in
35 which the following apply:
36 (a) The loan is made by a person who is not regularly engaged as
37 a lender in credit transactions of the same kind.
38 (b) The debtor is a person other than an organization.
39 (c) The debt is primarily for a personal, family, or household
40 purpose.
41 (d) Either the debt is payable in installments or a loan finance
42 charge is made.
HB 1174—LS 6725/DI 101 27
1 (e) Either:
2 (i) the amount of credit extended, the written credit limit, or
3 the initial advance does not exceed the exempt threshold
4 amount, as adjusted in accordance with the annual adjustment
5 of the exempt threshold amount, specified in Regulation Z (12
6 CFR 226.3 or 12 CFR 1026.3(b), as applicable); or
7 (ii) the debt is secured by an interest in land or by personal
8 property used or expected to be used as the principal dwelling
9 of the debtor.
10 (2) With respect to a consumer related loan, including one made
11 pursuant to a revolving loan account, the parties may contract for the
12 payment by the debtor of a loan finance charge, calculated according
13 to the actuarial method, not to exceed twenty-five percent (25%)
14 thirty-six percent (36%) per year on the unpaid principal balance.
15 (3) A person engaged in consumer related loans is not required to
16 comply with:
17 (a) the licensing requirements set forth in section 503 of this
18 chapter; or
19 (b) IC 24-4.5-6-201 through IC 24-4.5-6-203.
20 SECTION 13. IC 24-4.5-4-107, AS AMENDED BY P.L.85-2020,
21 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
22 JULY 1, 2025]: Sec. 107. Maximum Charge by Creditor for Insurance
23 - (1) Except as provided in subsection (2), if a creditor contracts for or
24 receives a separate charge for insurance, the amount charged to the
25 debtor for the insurance may not exceed the premium to be charged by
26 the insurer, as computed at the time the charge to the debtor is
27 determined, conforming to any rate filings required by law and made
28 by the insurer with the insurance commissioner.
29 (2) A creditor who provides consumer credit insurance in relation
30 to a revolving charge account (as defined in IC 24-4.5-2-108) or
31 revolving loan account (as defined in IC 24-4.5-3-108) may calculate
32 the charge to the debtor in each billing cycle by applying the current
33 premium rate to one (1) of the following:
34 (a) The average daily unpaid balance of the debt in the cycle.
35 (b) The unpaid balance of the debt or a median amount within a
36 specified range of unpaid balances of debt on approximately the
37 same day of the cycle. The day of the cycle need not be the day
38 used in calculating the credit service charge (IC 24-4.5-2-201(6))
39 or loan finance charge (IC 24-4.5-3-201, and IC 24-4.5-3-508),
40 IC 24-4.5-3-508, IC 24-4.5-3-508.1, or IC 24-4.5-3-508.2, as
41 applicable), but the specified range shall be the range used for
42 that purpose.
HB 1174—LS 6725/DI 101 28
1 (c) The unpaid balances of principal calculated according to the
2 actuarial method.
3 (d) The amount of the insurance benefit for the cycle.
4 SECTION 14. IC 24-4.5-7-102, AS AMENDED BY P.L.69-2018,
5 SECTION 25, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
6 JULY 1, 2025]: Sec. 102. (1) Except as otherwise provided, all
7 provisions of this article applying to consumer loans, including
8 IC 24-4.5-3-502.2, apply to small loans, as defined in this chapter.
9 (2) Subject to subsection (7), a person may not regularly engage in
10 Indiana in any of the following actions unless the department first
11 issues to the person a license under this chapter:
12 (a) The making of small loans.
13 (b) Taking assignments of small loans.
14 (c) Undertaking the direct collection of payments from or the
15 enforcement of rights against debtors arising from small loans.
16 (3) Subject to subsection (4), a person that seeks licensure under
17 this chapter:
18 (a) shall apply to the department for a license in the form and
19 manner prescribed by the department; and
20 (b) is subject to the same licensure requirements and procedures
21 as an applicant for a license to make consumer loans (other than
22 mortgage transactions) under IC 24-4.5-3-502.
23 (4) A person that seeks to make, take assignments of, or undertake
24 the direct collection of payments from or the enforcement of rights
25 against debtors arising from both:
26 (a) small loans under this chapter; and
27 (b) consumer loans (other than mortgage transactions) that are not
28 small loans;
29 must obtain a separate license from the department for each type of
30 loan, as described in IC 24-4.5-3-502(5).
31 (5) This chapter applies to:
32 (a) a lender;
33 (b) a bank, savings association, credit union, or other state or
34 federally regulated financial institution except those that are
35 specifically exempt regarding limitations on interest rates and
36 fees; or
37 (c) a person, if the department determines that a transaction is:
38 (i) in substance a disguised loan; or
39 (ii) the application of subterfuge for the purpose of avoiding
40 this chapter.
41 (6) A loan that:
42 (a) does not qualify as a small loan under section 104 of this
HB 1174—LS 6725/DI 101 29
1 chapter;
2 (b) is for a term shorter than that specified in section 401(1) of
3 this chapter; or
4 (c) is made in violation of section 201, 401, 402, 404, or 410 of
5 this chapter;
6 is subject to this article. The department may conform the loan finance
7 charge for a loan described in this subsection to the limitations set forth
8 in IC 24-4.5-3-508(2). IC 24-4.5-3-508.1(2).
9 (7) Notwithstanding IC 24-4.5-1-301.5, for purposes of subsection
10 (2), a person "regularly engages" in any of the activities described in
11 subsection (2) with respect to a small loan if the person:
12 (a) performed any of the activities described in subsection (2)
13 with respect to a small loan at least one (1) time in the preceding
14 calendar year; or
15 (b) performs or will perform any of the activities described in
16 subsection (2) with respect to a small loan at least one (1) time in
17 the current calendar year if the person did not perform any of the
18 activities described in subsection (2) with respect to a small loan
19 at least one (1) time in the preceding calendar year.
20 SECTION 15. IC 24-4.5-7-411 IS AMENDED TO READ AS
21 FOLLOWS [EFFECTIVE JULY 1, 2025]: Sec. 411. Finance charges
22 made in compliance with this chapter are exempt from:
23 (a) IC 24-4.5-3-508;
24 (b) IC 24-4.5-3-508.1; and
25 (c) IC 35-45-7.
26 SECTION 16. IC 28-7-5-28 IS AMENDED TO READ AS
27 FOLLOWS [EFFECTIVE JULY 1, 2025]: Sec. 28. (a) The maximum
28 rate of interest charged by pawnbrokers shall be the same as the
29 maximum loan finance charge for supervised lenders loans under
30 IC 24-4.5-3-508(2). IC 24-4.5-3-508.1(2). For purposes of this
31 subsection:
32 (1) the term of a loan commences on the date on which the loan
33 is made;
34 (2) differences in lengths of months are disregarded; and
35 (3) each day is counted as one-thirtieth (1/30) of a month.
36 The minimum term of a loan made by a pawnbroker is one (1) month.
37 However, on loans paid in full within the first month, the pawnbroker
38 may charge one (1) month's interest.
39 (b) Interest shall not be deducted in advance, neither shall the
40 pawnbroker induce or permit any borrower to split up or divide any
41 loan or loans for the purpose of evading any provisions of this chapter.
42 (c) If a pawnbroker charges or receives interest in excess of that
HB 1174—LS 6725/DI 101 30
1 provided in this section, or makes any charges not authorized by this
2 chapter, the pawnbroker shall forfeit principal and interest and return
3 the pledge upon demand of the pledger and surrender of the pawn
4 ticket without the principal or interest. If such excessive or
5 unauthorized charges have been paid by the pledger, the pledger may
6 recover the same, including the principal if paid, in a civil action
7 against the pawnbroker.
8 SECTION 17. IC 35-45-7-2, AS AMENDED BY P.L.158-2013,
9 SECTION 536, IS AMENDED TO READ AS FOLLOWS
10 [EFFECTIVE JULY 1, 2025]: Sec. 2. A person who, in exchange for
11 the loan of any property, knowingly or intentionally receives or
12 contracts to receive from another person any consideration, at a rate
13 greater than two (2) times the rate specified in IC 24-4.5-3-508(2)(a)(i),
14 IC 24-4.5-3-508.2(2), commits loansharking, a Level 6 felony.
15 However, loansharking is a Level 5 felony if force or the threat of force
16 is used to collect or to attempt to collect any of the property loaned or
17 any of the consideration for the loan.
HB 1174—LS 6725/DI 101 31
COMMITTEE REPORT
Mr. Speaker: Your Committee on Financial Institutions, to which
was referred House Bill 1174, has had the same under consideration
and begs leave to report the same back to the House with the
recommendation that said bill be amended as follows:
Page 1, between the enacting clause and line 1, begin a new
paragraph and insert:
"SECTION 1. IC 24-4.5-3-201, AS AMENDED BY P.L.29-2022,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: 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%)
thirty-six percent (36%) 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
HB 1174—LS 6725/DI 101 32
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%) thirty-six percent (36%) 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
HB 1174—LS 6725/DI 101 33
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
HB 1174—LS 6725/DI 101 34
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
HB 1174—LS 6725/DI 101 35
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).".
Page 8, between lines 18 and 19, begin a new paragraph and insert:
"SECTION 6. IC 24-4.5-3-501, AS AMENDED BY P.L.91-2013,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 501. Definitions:
HB 1174—LS 6725/DI 101 36
(1) "Supervised loan" means a consumer loan in which the rate of
the loan finance charge exceeds twenty-five percent (25%) thirty-six
percent (36%) per year as determined according to the provisions on
loan finance charge for consumer loans in section 201 of this chapter.
(2) "Supervised lender" means a person authorized to make or take
assignments of supervised loans.".
Page 17, line 5, delete "Eight percent (8%)" and insert "Six percent
(6%)".
Page 17, line 8, delete "Six percent (6%)" and insert "Five percent
(5%)".
Page 17, line 12, delete "Five percent (5%)" and insert "Three
percent (3%)".
Page 18, between lines 19 and 20, begin a new paragraph and insert:
"(12) With respect to a supervised loan made under this section,
a lender must report the borrower's payments on the supervised
loan to at least one (1) 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.).".
Page 21, between lines 28 and 29, begin a new paragraph and insert:
"SECTION 10. IC 24-4.5-3-602, AS AMENDED BY P.L.69-2018,
SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 602. (1) A "consumer related loan" is a loan in
which the following apply:
(a) The loan is made by a person who is not regularly engaged as
a lender in credit transactions of the same kind.
(b) The debtor is a person other than an organization.
(c) The debt is primarily for a personal, family, or household
purpose.
(d) Either the debt is payable in installments or a loan finance
charge is made.
(e) Either:
(i) the amount of credit extended, the written credit limit, or
the initial advance does not exceed the exempt threshold
amount, as adjusted in accordance with the annual adjustment
of the exempt threshold amount, specified in Regulation Z (12
CFR 226.3 or 12 CFR 1026.3(b), as applicable); or
(ii) the debt is secured by an interest in land or by personal
property used or expected to be used as the principal dwelling
of the debtor.
(2) With respect to a consumer related loan, including one made
pursuant to a revolving loan account, the parties may contract for the
HB 1174—LS 6725/DI 101 37
payment by the debtor of a loan finance charge, calculated according
to the actuarial method, not to exceed twenty-five percent (25%)
thirty-six percent (36%) per year on the unpaid principal balance.
(3) A person engaged in consumer related loans is not required to
comply with:
(a) the licensing requirements set forth in section 503 of this
chapter; or
(b) IC 24-4.5-6-201 through IC 24-4.5-6-203.".
Renumber all SECTIONS consecutively.
and when so amended that said bill do pass.
(Reference is to HB 1174 as introduced.)
TESHKA
Committee Vote: yeas 7, nays 5.
HB 1174—LS 6725/DI 101