Indiana Cash Advance Consumer Resource

It is never easy dealing with a dwindling bank account and mounting bills, especially in the current economy. Unfortunate as it is, there are those that would use these difficulties people have to squeeze money out of their already thinning wallets. Promises of upfront cash without inquiries into someone’s credit history will seem like a beacon of hope to those who are desperate for it. But before you sign up for what seems like a golden opportunity to settle some debts with a cash advance in Indiana, it is important to understand the rules and regulations regarding small loans and payday loans.

What You Need to Know About Payday Loans in Indiana

For those seeking a cash loan in Indiana, there are some state laws that place limits on the various aspects of payday loans. If you are searching for a small loan, payday loans are the type you will find most readily available. Where a bank requires relatively extensive examination of your credit history, payday loans only require the verification that you are employed, that you have an active bank account and that you can provide valid identification. In most cases, once these simple steps are passed, you write the lender a check in the amount of the loan plus any additional charges or fees and it is usually dated for your next payday, which is where the name comes from. If you do not settle the loan when the prearranged term has ended, the lender will then cash the check you wrote, even though not paying the loan generally means you do not have the funds available in your bank account, which will get you slapped with an overdraft fee, as well as other fees associated with the lender.

What Indiana Has Done for You

Since the federal government passed responsibility for regulating smaller loans on to the states, a variety of legislation has come into effect.

• Limit maximum loan: Payday loans giving a cash advance in Indiana cannot exceed $550 or 20% of the borrower’s monthly income, whichever comes is lowest. Keeping this maximum so low (other states can allow up to a few thousand dollars) the state of Indiana is ensuring that the debt accrued in a payday loan is never too great. If a person wants more, they have to go through an organization that would require a credit check, such as a bank, which would make certain the borrower was capable of repaying the loan.

• Sliding scale of rates and fees: The more you borrow, the less you pay in extra fees. While this appears as though it would only encourage larger loans, it also keeps the end total from growing too large, much like limiting the maximum loan amount. For the first $250, the interest rate is capped at 15%, which then drops to 13% for up to $400 and 10% for $500.
• Limited number of loans: This limitation is just one more step in state legislation to keep consumers from taking on more than they can handle. The current law states that an individual may only have two outstanding loans at once. Often, when debt spirals out of control, people will become hooked into using new loans to pay off old loans, never gaining any ground. Limiting the number of loans makes it harder to lose track of what you owe and where.

• Cooling off period: After six consecutive loans, the law requires that you take a seven-day period without any loan activity whatsoever. For those who may become accustomed to having their daily life plagued by debt, this offers a breath of fresh air to try and reorganize and break the cycle of debt.

• No rollovers: Also known as renewals, this process is a way for lenders to simultaneously extend and deepen the debt of borrowers. When a loan period ends and the borrower cannot repay the loan, a rollover will be offered as a solution. It involves taking an entirely new loan out, with its own finance charges, to cover the cost of the original loan. This obviously can easily lead to an ever-growing debt and a reliance on loans. By completely removing them from the process, a borrower is forced to settle a loan, as opposed to rolling over that debt.

• Forced repayment plan: After three consecutive loans with a particular lender, that lender, by law, must cooperate with the borrower to structure a repayment plan at no additional cost to the borrower. The repayment plan is also required to have at least four separate payments of equal value. This requirement takes the power out of the lender’s hands and places it with the borrower, giving confidence to repay a loan and climb out of debt.

These provisions that have been worked into the laws regarding a cash advance in Indiana are some of the most protective in the country for consumers. However, it is still important for borrowers to know the rules and regulations in order to avoid getting caught in debt. One of the simplest steps you can take is to fully comprehend any document you sign beforehand. If all of the legal jargon is a bit tough for you, there are numerous free resources in any area that are funded with taxpayer money and are setup to help people make the right choices and stay out of debt.

Because of the growing availability of payday lenders across the nation, it is becoming increasingly difficult for the government to effectively monitor all of them. If you experience a lender in Indiana that does not follow the above regulations, be sure to report them to the Indiana Department of Financial Institutions. With your help, predatory lending that takes advantage of people in need can be greatly restricted. Also, depending upon the state and the violations committed, it is possible the offending lender is prohibited from collecting the loan or is even required to pay you. Either way, knowing the laws governing payday loans ensures a better community for all.