Be sure you know the laws before you apply.
There are times in life where you might need a loan to get you through an emergency. In Indiana, you’ll be able to borrow up to $550, but first you’ll need to know the regulations lenders must follow so you can avoid falling into a debt cycle.
Can I get a payday loan in Indiana?
Yes, payday loans are legal in Indiana and are goverened by Indiana Code Ann. 24-4-4.5-7-101 et seq.
Four main guidelines lenders in Indiana must abide by:
- Maximum Loan Amount: $550 or 20% of your gross monthly income, whichever is less
- Minimum Loan Term: 14 days
- Maximum Loan Term: None
- APR: 14-day $100 loan is 390%
Compare payday loans available in Indiana
Check the websites of any providers you’re interested in to confirm they operate in Indiana.
Costs to consider
Indiana law does allow for financing charges for specific loan amounts. These charges stack depending on how much you borrow based on the percentage rates listed below:
- $50 to $250: 15% of loan amount
- $251 to $400: 13% of loan amount
- $401 to $500: 10% of loan amount
These percentages apply separately to the amounts you borrow. If you take out $300, the first $250 will be charged a 15% interest rate and the remaining $50 will be charged a 13% rate, and so on. This is to prevent lenders from charging extremely high fees for borrowing money.
Lenders may charge a $25 non-sufficient funds (NSF) fee if they unsuccessfully attempt to withdraw funds from your bank account. You can pay this fee via check or a lender may attempt to debit your checking account up to three times.
New regulations in the futureSB-245, which would have raised the minimum amount available to borrow, didn’t pass into the Indiana Senate meetings.
Most recently, SB-325 proposed to create a new provision which would allow lenders to extend loans between $605 and $1,500 to borrowers. These loans would have lasted between three to twelve months and would have had interest rates as high as 222%. Borrowers would have been unable to take out more than one extended payday loan at a time, and lenders could only charge payments less than 20% of a borrower’s gross monthly income. However, this bill wasn’t seen by the senate and won’t be put in place in the near future.
Although payday loans are high-cost alternatives to regular loans, they do provide help specifically to people with bad credit. If you think there could be improvements — like lower interest rates — contact your local representative and speak your mind.
What will I need to apply?
Eligibility criteria varies between lenders, but you will need to be at least 18 years old, a US citizen or permanent resident and have a regular source of income before applying.
Lenders may need your Social Security number and details about your employment/income in order to process your application. If you apply online, lenders usually need access to your checking account in order to deposit your loan and debit your payments.
3 alternatives to payday loans in Indiana
A payday loan can be a good way to cover the gaps in your budget when an emergency crops up, but because these are high-cost loans, you’ll need to have a solid plan of repayment before you apply.
- Local government assistance. If you have trouble paying for your energy or food costs, you should contact the Low Income Energy Assistance Program or the Community Harvest Food Bank. More information on these and other alternatives can be found here.
- Credit card cash advance. You could withdraw cash from your existing credit card‘s limit. When you withdraw cash from your credit card at an ATM, you’ll be notified of the cash advance fee at that time. It’ll likely be costly, but may be less than the cost of a payday loan.
- Make extra money on the side. Consider a side gig like driving for Uber or taking surveys online to make some extra cash during your spare hours. Although it might not have as high of an hourly rate as your main job, it could provide you with enough funds to avoid a payday loan.