Indiana Payday & Small-Dollar Loan Laws

Indiana lending overview

Indiana statutes allow for short-term lending with specific limitations on loan size and costs. Residents may borrow up to $550, though the total principal cannot exceed 20% of their gross monthly income. These loans require a minimum term of 14 days and carry tiered finance charges based on the amount borrowed. Lenders typically charge 15% on the first $250, 13% on amounts through $400, and 10% on the remaining portion up to the state limit. Under these regulations, a standard 14-day loan often carries an annual percentage rate of approximately 391%.

Borrowers in the state utilize various financial products to address immediate expenses or long-term funding needs. Common options include payday loans for small gaps in cash flow and installment loans for larger amounts repaid over several months. Personal loans from traditional banks or online lenders serve those seeking lower rates and extended repayment schedules. Given the high costs associated with short-term credit, residents frequently compare these emergency funding sources against traditional personal lines of credit to manage their household debt obligations.

What the law means for borrowers

Indiana's rules affect whether payday loans are available, how much a borrower may be able to receive, how long repayment can last, and what finance charges may apply. Even where payday lending is legal, the total repayment amount can be substantially higher than the amount borrowed.

Before accepting a loan offer

• Confirm the lender is licensed or otherwise authorized to operate in Indiana.
• Compare APR, fees, payment schedule, and total repayment amount.
• Check whether rollovers, renewals, or refinancing are allowed or restricted.
• Consider lower-cost alternatives such as credit-union small-dollar loans, payment plans, employer advances, or local assistance programs.