Credit service charge for consumer credit sales; sales agreements entered into after June 30, 2020; precomputed sales prohibited; nonrefundable prepaid finance charge authorized; revolving charge accounts; subterfuge by seller; applicability of criminal loansharking statute
Ind. Code § 37-2-3-4
in effectSec. 4. (a) Except as provided in subsections (h) and (k), with respect to a consumer credit sale, a seller may contract for and receive a credit service charge not exceeding that permitted by this section.
(b) The credit service charge, calculated according to the actuarial method, may not exceed the equivalent of the greater of:
(1) the total of:
(A) thirty-six percent (36%) per year on that part of the unpaid balances of the amount financed which is two thousand dollars ($2,000) or less;
(B) twenty-one percent (21%) per year on that part of the unpaid balances of the amount financed which is more than two thousand dollars ($2,000) but does not exceed four thousand dollars ($4,000); and
(C) fifteen percent (15%) per year on that part of the unpaid balances of the amount financed which is more than four thousand dollars ($4,000); or
(2) twenty-five percent (25%) per year on the unpaid balances of the amount financed.
(c) In the case of a sale agreement entered into before July 1, 2020, this section does not limit or restrict the manner of contracting for the credit service charge, whether by way of add-on, discount, or otherwise, so long as the rate of the credit service charge does not exceed that permitted by this section. If the sale is precomputed:
(1) the credit service charge may be calculated on the assumption that all scheduled payments will be made when due; and
(2) the effect of prepayment is governed by the provisions on rebate upon prepayment in section 12 of this chapter.
(d) The following apply to a sale agreement for a consumer credit sale (or for the refinancing or consolidation of a consumer credit sale) that is entered into after June 30, 2020:
(1) The credit service charge authorized by this section must be:
(A) contracted for between the seller and the debtor; and
(B) calculated by applying a rate not exceeding the rate set forth in subsection (b) to unpaid balances of the amount financed.
(2) A sale agreement for a precomputed consumer credit sale is prohibited.
(3) Subject to subsection (m), in addition to the credit service charge authorized by subsection (b) and to any other fees permitted by this chapter, and not subject to the rate set forth in subsection (b), the seller may contract for and receive as a condition for, or an incident to, the extension of credit a nonrefundable prepaid finance charge under subsection (k), whether the charge is:
(A) paid separately in cash or by check before or at consummation; or
(B) withheld from the proceeds of the consumer credit sale.
(e) For the purposes of this section, the term of a sale agreement commences with the date the credit is granted or, if goods are delivered or services performed more than thirty (30) days after that date, with the date of commencement of delivery or performance except as follows:
(1) This subdivision applies to a delay attributable to the customer. Where the customer requests delivery after the thirty (30) day period or where delivery occurs after the thirty (30) day period for a reason attributable to the customer (including but not limited to failure to close on a residence or failure to obtain lease approval), the term of the sale agreement shall commence with the date credit is granted.
(2) This subdivision applies to a partial delivery. Where any portion of the order has been delivered within the thirty (30) day period, the term of the sale agreement shall commence with the date credit is granted.
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 seller 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.
(f) With respect to a consumer credit sale made pursuant to a revolving charge account, the parties to the sale may contract for the payment by the buyer of a credit service charge not exceeding that permitted in this section, subject to the following:
(1) The credit service charge contracted for and received may not exceed a charge in each monthly billing cycle which is two and eighty-three thousandths percent (2.083%) of an amount not greater than:
(A) the average daily balance of the account;
(B) the unpaid balance of the account on the same day of the billing cycle; or
(C) subject to subsection (g), the median amount within a specified range within which the average daily balance of the account or the unpaid balance of the account, on the same day of the billing cycle, is included.
For purposes of clauses (B) and (C), a variation of not more than four (4) days from month to month is "the same day of the billing cycle".
(2) If the billing cycle is not monthly, the maximum charge is that percentage which bears the same relation to the applicable monthly maximum percentage as the number of days in the billing cycle bears to thirty (30).
(3) Notwithstanding subdivision (1), if there is an unpaid balance on the date as of which the credit service charge is applied, the seller may contract for and receive a charge not exceeding fifty cents ($0.50) if the billing cycle is monthly or longer, or the pro rata part of fifty cents ($0.50) which bears the same relation to fifty cents ($0.50) as the number of days in the billing cycle bears to thirty (30) if the billing cycle is shorter than monthly. However, a seller may not contract for or receive a charge under this subdivision if the seller has made an annual charge for the same period as permitted by the provisions on additional charges in section 5(a)(5) of this chapter.
(g) Subject to classifications and differentiations the seller may reasonably establish, the seller may make the same credit service charge on all amounts financed within a specified range. A credit service charge so made does not violate subsection (b) if:
(1) when applied to the median amount within each range, it does not exceed the maximum permitted by subsection (b); and
(2) when applied to the lowest amount within each range, it does not produce a rate of credit service charge exceeding the rate calculated according to subdivision (1) by more than eight percent (8%) of the rate calculated according to subdivision (1).
(h) Notwithstanding subsection (b), with respect to a consumer sale other than a sale under a revolving charge account, the seller may contract for and receive a minimum credit service charge of not more than thirty dollars ($30). The minimum credit service charge allowed under this subsection may be imposed only if the seller does not contract for or receive a nonrefundable prepaid finance charge under subsection (k) and:
(1) the debtor prepays in full a consumer credit sale, refinancing, or consolidation, regardless of whether the sale, refinancing, or consolidation is precomputed;
(2) the sale, refinancing, or consolidation prepaid by the debtor is subject to a credit service charge that:
(A) is contracted for by the parties; and
(B) does not exceed the rate prescribed in subsection (b); and
(3) the credit service charge earned at the time of prepayment is less than the minimum credit service charge contracted for under this subsection.
(i) The amounts of two thousand dollars ($2,000) and four thousand dollars ($4,000) in subsection (b) are subject to change pursuant to the provisions on adjustment of dollar amounts (IC 37-2-1-5). However, notwithstanding IC 37-2-1-5(a), the Reference Base Index to be used under this subsection is the Index for October 2012.
(j) The amount of thirty dollars ($30) in subsection (h) is subject to change under the provisions on adjustment of dollar amounts (IC 37-2-1-5). However, notwithstanding IC 37-2-1-5(a), the Reference Base Index to be used under this subsection is the Index for October 1992.
(k) This subsection applies to a sale agreement entered into after June 30, 2020. Except as provided in subsection (h), and subject to subsection (m), in addition to the credit service charge authorized by subsection (b), and to any other fees permitted by this chapter, a seller may contract for and receive a nonrefundable prepaid finance charge in an amount which is not more than:
(1) seventy-five dollars ($75) for an amount financed which is two thousand dollars ($2,000) or less;
(2) one hundred fifty dollars ($150) for an amount financed which is more than two thousand dollars ($2,000) but does not exceed four thousand dollars ($4,000); and
(3) two hundred dollars ($200) for an amount financed which is more than four thousand dollars ($4,000).
The nonrefundable prepaid finance charge is not subject to refund or rebate. However, any amount charged by the seller, other than by a seller that is a depository institution, under this subsection that exceeds the applicable amount permitted by this subsection constitutes a violation of this article under IC 37-2-7-8(12) and is subject to refund. Any amount charged by a depository institution under this subsection that exceeds the applicable amount set forth in this subsection is subject to refund. The amounts in this subsection are not subject to change under IC 37-2-1-5.
(l) If the director determines that a seller's accrual method of accounting as applied to a consumer credit sale under this section involves the application of subterfuge for the purpose of circumventing this chapter, the director may conform the credit service charge and fees for the transaction to the limitations set forth in this section and may require a refund of overcharges under IC 37-2-7-5(b)(1). A determination by the director under this subsection:
(1) must be in writing;
(2) shall be delivered to all parties in the transaction; and
(3) is subject to IC 4-21.5-3.
(m) At the time of consummation of a consumer credit sale:
(1) the credit service charge authorized by subsection (b); and
(2) the nonrefundable prepaid finance charge authorized by subsection (k) (including any amount charged by a depository institution that exceeds the applicable amount set forth in subsection (k)) in the case of a sale agreement entered into after June 30, 2020;
are subject to IC 35-45-7 and, when combined, may not exceed the rate set forth in IC 35-45-7-2.
[Pre-2026 Revision Citation: 24-4.5-2-201.]
As added by P.L.115-2026, SEC.97.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/37Fetched: 10/17/2026