Payday loans in Indiana

Indiana small-loan rules: the direct answer

Indiana permits small loans, commonly called payday loans, from licensed or exempt lenders. The Indiana Department of Financial Institutions borrower pamphlet currently sets an $825 aggregate principal ceiling, a fourteen-day minimum term and a separate limit of 20% of the borrower’s gross monthly income. A borrower cannot use the larger figure when the income calculation produces a lower amount.

Pricing follows three statutory tiers rather than one percentage applied to the entire advance: up to 15% on the first $250, 13% on the portion from $250 through $400 and 10% on the portion above $400 through $825. The complete dollar finance charge and annual percentage rate still belong in the signed agreement because a permitted short-term fee can annualize to a triple-digit APR.

Indiana reorganized its consumer-lending statutes on July 1, 2026. DFI says its existing consumer-credit guidance remains in force even where documents display former Indiana Code numbers. This guide therefore uses the current Title 37 framework together with DFI’s active January 2025 borrower pamphlet instead of treating the printed legacy citation as a repealed consumer protection.

What the Indiana rules cover

The small-loan framework addresses short transactions secured only by one personal check or one authorization to debit an account. The security instrument cannot exceed the advance plus permitted finance charges, and the lender cannot demand a PIN or take household goods, a vehicle title or other personal property as additional collateral.

A national website may instead be an advertiser, referral service, broker, lead generator or installment lender. Submitting a form does not identify the eventual creditor or prove that its contract is an Indiana small loan. Classify the parties after matching: record the website receiving the request, the legal lender funding the money, any servicer collecting payments and every business authorized to use the applicant’s data.

$825 maximum, income test and outstanding-loan limits

One lender cannot place a consumer under more than one loan agreement with that lender at a time. Across small loans, the aggregate principal or amount financed outstanding cannot exceed $825. A lender also cannot make another small loan when the borrower already has two or more small loans outstanding, even if their combined principal is below the dollar ceiling.

Indiana uses a statewide database to track small loans and apply eligibility limits. Ask the lender to explain which outstanding record blocks a transaction and how a mistaken record can be corrected.

The proposed advance cannot exceed 20% of monthly gross income. For $2,400 in gross monthly income, the income test is $480; for $5,000, it is $1,000, so the separate $825 ceiling controls. Gross income is measured before payroll deductions. It says nothing about rent, food, utilities, transportation or other debts, so statutory eligibility is not a household affordability finding.

Finance-charge tiers and an $825 example

Indiana’s maximum charge is marginal. On a $300 advance, the first $250 can cost $37.50 and the remaining $50 can cost $6.50, for a $44 charge and $344 payoff. It would be incorrect to charge 13% on the complete $300 and call that the statutory formula.

At $825, the maximum scheduled finance charge is $99.50: $37.50 on the first tier, $19.50 on the next $150 and $42.50 on the final $425. The payoff is $924.50. If that transaction lasts fourteen days, the simple annualized illustration is about 314%. This is an educational calculation, not a quote; use the federal APR and exact dates printed in the lender’s disclosure.

Except for specifically allowed default costs, DFI says the lender cannot directly or indirectly add another amount. A lender cannot charge to cash its own proceeds check, and an affiliated check casher cannot impose such a fee. Compare every deducted, expedited, membership or processing charge with the written agreement rather than assuming a different name removes it from the cost of credit.

Written agreement, cancellation and partial payments

The borrower and an authorized lender representative must sign the contract, and the lender must provide a duplicate original at the transaction. Save a durable copy before leaving a website or store. The amount advanced, finance charge, APR, due date, check or debit authorization and legal lender name should agree across the disclosure and bank record.

A borrower may cancel before the close of business on the next day the lender is open after the borrower receives the proceeds. Cancellation requires returning the amount advanced through an accepted form such as cash, certified funds, authorized debit or, when supported, a payment card. Obtain confirmation that the principal was returned, the finance charge removed and the payment authorization closed.

No renewals, consecutive loans and extended payment plans

The lender cannot renew, refinance, consolidate or repay its small loan with proceeds from another small loan it makes. A new loan entered with the same lender no later than seven calendar days after the prior loan is paid in full is a consecutive small loan. Paying off and immediately reborrowing is therefore tracked as a sequence, not treated as a cost-free reset.

When the third, fourth or fifth consecutive loan is entered, the lender must offer an extended payment plan. After the cancellation period expires, a borrower who is not in default may request the plan during the term of a third or later consecutive loan. DFI’s model provides at least four equal installments over at least sixty days, with no added plan fee.

While an EPP remains unpaid, the borrower cannot enter another small-loan transaction with any small-loan lender. After an initial loan plus five consecutive loans with one lender, a seven-day cooling-off period applies. These protections are more useful when the borrower preserves payoff dates, offer notices and EPP requests instead of relying on a phone conversation.

Returned payments and collection boundaries

A dishonored check or electronic transfer can produce a charge of no more than $25. DFI’s pamphlet states that the charge may be assessed only once regardless of how many times the same check or debit authorization is dishonored. Review the bank’s separate fee as well, since it affects the household result even when it is not charged by the lender.

A small-loan lender cannot threaten or begin criminal proceedings merely because the borrower’s check is returned unpaid. That does not cancel the contractual balance or prevent lawful civil collection. Save notices, bank statements, debit attempts and messages, and dispute an incorrect amount in writing with dates and the remedy requested.

License checks, online applications and complaints

Use the Indiana DFI license lookup and select the consumer-credit listing for licensed small lenders. Search the exact legal name from the agreement, not only a domain or marketing brand. DFI’s Consumer Credit Division handles licensing, examinations, renewals and complaints for nonbank small-loan lenders that reach Indiana consumers.

Start a complaint record with the advertisement, application confirmation, agreement, payment history, license result, correspondence and redacted bank evidence. DFI recommends first contacting someone with authority at the company, then submitting copies rather than originals if the dispute remains unresolved. Its complaint process may refer matters outside DFI jurisdiction to another regulator.

Indiana offer checklist and lower-cost options

Before using short-term credit, ask a biller about a due-date adjustment, installment arrangement or hardship program. Compare a bank or credit-union small-dollar product, employer assistance, local utility relief and reputable nonprofit counseling. Put the complete payoff into the repayment-budget calculator; the legal 20% gross-income limit is a ceiling, not a recommendation.

1. Identify the legal lender, referral service, servicer and every party receiving application data.
2. Verify the lender through Indiana DFI using the exact company name shown in the agreement.
3. Apply both the $825 aggregate ceiling and the 20% gross-monthly-income limit.
4. Recalculate all three charge tiers, total payoff and APR using the actual term.
5. Record outstanding loans, consecutive-loan count, cancellation deadline and EPP eligibility.
6. Save the signed contract, receipts, debit authorization, bank records and complaint correspondence.

Indiana payday-loan FAQ

Question 1Are payday loans legal in Indiana?

Answer

Yes. Indiana permits regulated small loans from licensed or exempt lenders under its current consumer-lending framework.

Question 2What is the maximum Indiana payday-loan amount?

Answer

DFI’s active borrower pamphlet states an $825 aggregate principal ceiling. A proposed loan also cannot exceed 20% of monthly gross income, and a borrower with two outstanding small loans cannot receive another.

Question 3How much can an Indiana small loan cost?

Answer

The maximum finance charge is 15% on the first $250, 13% on the portion from $250 through $400 and 10% on the portion above $400 through $825. At $825, those tiers total $99.50.

Question 4Can an Indiana borrower cancel after receiving the money?

Answer

The borrower may cancel before close of business on the next day the lender is open after receiving proceeds by returning the amount advanced through an accepted payment method.

Question 5When is an Indiana extended payment plan available?

Answer

The lender must offer an EPP with the third, fourth or fifth consecutive loan. An eligible borrower may request it during a third or later consecutive loan after the cancellation period and before default; the plan has at least four equal payments over at least sixty days without an added fee.

Official Indiana