Section 24-4.5-3-508 - Loan finance charge for supervised loans; precomputed supervised loans prohibited after June 30, 2020; nonrefundable prepaid finance charge; loan paid in full by new loan from same lenderLoan Finance Charge for Supervised Loans -
(1) With respect to a supervised loan, including a loan pursuant to a revolving loan account, a supervised lender may contract for and receive a loan finance charge not exceeding that permitted by this section.(2) The loan finance charge, calculated according to the actuarial method, may not exceed the equivalent of the greater of:(a) the total of: (i) thirty-six percent (36%) per year on that part of the unpaid balances of the principal (as defined in section 107(3) of this chapter) which is two thousand dollars ($2,000) or less;(ii) twenty-one percent (21%) per year on that part of the unpaid balances of the principal (as defined in section 107(3) of this chapter) which is more than two thousand dollars ($2,000) but does not exceed four thousand dollars ($4,000); and(iii) fifteen percent (15%) per year on that part of the unpaid balances of the principal (as defined in section 107(3) of this chapter) which is more than four thousand dollars ($4,000); or(b) twenty-five percent (25%) per year on the unpaid balances of the principal (as defined in section 107(3) of this chapter).(3) 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. After June 30, 2020, a loan agreement may not be entered into for a precomputed supervised loan. The loan finance charge authorized by this section must be contracted for between the lender and the debtor, and must be calculated by applying a rate not exceeding the rate set forth in subsection (2) to unpaid balances of the principal (as defined in section 107(3) of this chapter).
(4) The term of a loan for the purposes of this section commences on 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 that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.(5) Subject to classifications and differentiations the lender may reasonably establish, the lender may make the same loan finance charge on all principal amounts within a specified range. A loan finance charge does not violate subsection (2) if: (a) when applied to the median amount within each range, it does not exceed the maximum permitted in subsection (2); 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).(6) The amounts of two thousand dollars ($2,000) and four thousand dollars ($4,000) in subsection (2) and thirty dollars ($30) in subsection (7) are subject to change pursuant to the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), for the adjustment of the amount of thirty dollars ($30), the Reference Base Index to be used is the Index for October 1992. Notwithstanding IC 24-4.5-1-106(1), for the adjustment of the amounts of two thousand dollars ($2,000) and four thousand dollars ($4,000), the Reference Base Index to be used is the Index for October 2012.(7) With respect to a supervised 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 assess a nonrefundable prepaid finance charge under subsection (8) 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 (2); 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) Except as provided in subsections (7) and (10)(c), in addition to the loan finance charge provided for in this section and to any other charges and fees permitted by this chapter, the lender may contract for and receive a nonrefundable prepaid finance charge of not more than 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:(a) Seventy-five dollars ($75), in the case of a loan agreement for a principal amount which is two thousand dollars ($2,000) or less.(b) 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).(c) 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.
(9) The nonrefundable prepaid finance charge provided for in subsection (8) is not subject to refund or rebate. However, for any supervised 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 (8) that exceeds the applicable amount permitted by subsection (8) 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 (8) that exceeds the applicable amount set forth in subsection (8) is subject to refund.(10) Notwithstanding subsections (8) and (9), in the case of a supervised 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 supervised 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 (8) for loan agreements entered into after June 30, 2020.(11) In the case of a supervised 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 (8).Amended by P.L. 29-2022,SEC. 6, eff. 3/7/2022.Amended by P.L. 85-2020,SEC. 16, eff. 7/1/2020.Amended by P.L. 159-2017,SEC. 14, eff. 7/1/2017.Dollar amounts in this section are subject to amendment by 750 IAC 1-1-1.Amended by P.L. 91-2013, SEC. 4, eff. 7/1/2013.(Formerly: Acts1971 , P.L. 366, SEC.4.) As amended by Acts1981 , P.L. 219, SEC.4; Acts1982 , P.L. 149, SEC.4; Acts1982 , P.L. 150, SEC.5; P.L. 14-1992, SEC.38; P.L. 122-1994, SEC.27; P.L. 10-2006, SEC.8 and P.L. 57-2006, SEC.8; P.L. 145-2008, SEC.28.