Payday Loans in Indiana: Subprime Report
An estimated 968,000 of Indiana’s 6,412,384 residents were living in poverty in 2017, which works out to nearly 15% of the state’s population. When in dire financial need, some Hoosiers might be tempted to turn to payday loans, and while these risky loans are indeed legal in Indiana, taking them out can quickly lead to crushing debt.
With a little knowledge of how payday loans and title loans work in Indiana, Hoosiers who need a little cash injection can avoid being trapped in an endless cycle of debt – simply by making better choices.
- Nickname: "The Hoosier State"
- Population: 6,691,878
- Website: IN.gov
Payday Loans in Indiana
Although payday lenders are relatively rare in Indiana, they’re still legal, a fact which makes them a tempting proposition for Hoosiers in a financial jam. In order to receive a payday loan in Indiana, the borrower must give the lender a post-dated check for the amount of the loan, plus the loan fee. In exchange, they get the cash they need upfront. After that, the borrower must either back the loan with the fee within 14 days, allow the check to be cashed, or ask to roll over the loan for another 2 weeks – and pay yet another fee.
These fees add up, and borrowers can quickly find themselves in a cycle of debt, as lenders hand them increasingly larger shovels and watch them try to dig themselves out of a quickly crumbling pit of debt.
The average payday loan in Indiana is for just $317. While that amount is relatively low, it can balloon into a debt of thousands of dollars if borrowers roll their loans over multiple times before paying them off. Sadly, this all too common in the Hoosier state. The average payday loan borrower in Indiana takes out ten loans a year (which is comparable to the rate for all U.S. borrowers) and spends 5 months in debt, and 60% of borrowers take out another loan the same day they pay off another one.
Title Loans in Indiana
Like payday loans, title loans are also meant to be short-term cash loans. But while the typical APR for a car title loan (300%) is lower than that of a payday loan (416%), title loans are typically much larger, with a longer minimum length (30 days). For a car title loan, the borrower puts up the title to their vehicle as collateral. This allows borrowers to gain access to more money, but could also put them in a bad spot. If a title loan borrower is unable to pay back their loan on time, their options are limited: either take out another high-interest loan or potentially lose access to their vehicle. It’s a lose-lose situation. Nationally, about one in five title loan borrowers lose their cars.
Some more good news for Hoosiers, though: title loans are prohibited in Indiana. The Center for Responsible Lending estimates that Indiana has saved $122,076,574 in car-title fees, thanks to its restrictions on this type of lending.
Consumer Protection in Indiana
How to Report a Predatory Lender in Indiana
If you’ve gotten in over your head and feel that predatory lending practices are to blame, you do have options. You can contact the Indiana Department of Financial Institutions (DFI) and lodge a complaint. While the DFI doesn’t have any legal authority, they can put you in touch with organizations that help Hoosiers who have been the victims of predatory lending.
The key to any fight against a predatory lender is documentation. Keep records of every interaction, every payment, every scrap of information. Even keeping notes on phone calls is helpful.
And for other relief, you can reach out to organizations in your community, like the Indianapolis Legal Aid Society, which serves all of central Indiana. In 2014, the Indiana Legal Services created the Consumer Advocacy Project to help Hoosiers either avoid this situation in the first place or assist in helping them escape these debt traps. Church and other community groups, like Brightpoint in Fort Wayne, may also be able to offer assistance.
Contact the Indiana State Department of Financial Institutions by writing, calling, or submitting a complaint to:
- Address: 30 South Meridian Street, Suite 300, Indianapolis, IN 46204
- Phone: 317-232-3955
- Email: dficomplaints@dfi.IN.gov
The Indiana Legal Services Consumer Advocacy Project may also be able to help:
Although the latest attempt by payday lenders to unshackle themselves from regulation in Indiana has stalled for now, the assault on cash-strapped consumers continues. The payday loan industry is sapping Indiana communities of $70 million a year in fees. In general, if you find yourself in dire need of a small amount of money, remember that taking out a payday loan may lead to even greater ruin down the road. Just don’t do it.
Guides to Payday and Title Loans in Indiana Cities
Predatory lending in Indiana is a big issue for residents. And it gets even more complicated at the city level. Check back soon for these payday loan and title loan guides to the following cities in Indiana:
Indianapolis | Fort Wayne | Evansville