§ 24-4.5-2-201 — 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

Credit Service Charge for Consumer
Credit Sales — (1) Except as provided in subsections (8) and (11), 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.
(2) The credit service 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 amount financed (as defined in section 111 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 amount financed (as defined in section 111 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 amount financed (as defined in section 111 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 amount financed (as defined in section 111 of this chapter).
(3) 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:
(a) the credit service 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.
(4) 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:
(a) The credit service charge authorized by this section must be:
(i) contracted for between the seller and the debtor; and
(ii) calculated by applying a rate not exceeding the rate set forth
in subsection (2) to unpaid balances of the amount financed (as
defined in section 111 of this chapter).
(b) A sale agreement for a precomputed consumer credit sale is
prohibited.
(c) Subject to subsection (13), in addition to the credit service
charge authorized by subsection (2) and to any other fees permitted
by this chapter, and not subject to the rate set forth in subsection
(2), 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 (11), whether the charge is:
(i) paid separately in cash or by check before or at
consummation; or
(ii) withheld from the proceeds of the consumer credit sale.
(5) 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 set
forth below:
(a) Delays 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.
(b) Partial Deliveries. 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.
(6) 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:
(a) 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:
(i) the average daily balance of the account;
(ii) the unpaid balance of the account on the same day of the
billing cycle; or
(iii) subject to subsection (7), 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 (ii) and (iii), a variation of not more than
four (4) days from month to month is "the same day of the billing
cycle".
(b) 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).
(c) Notwithstanding subdivision (a), 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 202(1)(e) of this chapter.
(7) 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 (2) if:
(a) when applied to the median amount within each range, it does
not exceed the maximum permitted by subsection (2); and
(b) 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 (a) by more than eight percent
(8%) of the rate calculated according to subdivision (a).
(8) Notwithstanding subsection (2), 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 (11) and:
(a) the debtor prepays in full a consumer credit sale, refinancing,
or consolidation, regardless of whether the sale, refinancing, or
consolidation is precomputed;
(b) the sale, refinancing, or consolidation prepaid by the debtor is
subject to a credit service charge that:
(i) is contracted for by the parties; and
(ii) does not exceed the rate prescribed in subsection (2); and
(c) the credit service charge earned at the time of prepayment is
less than the minimum credit service charge contracted for under
this subsection.
(9) The amounts of two thousand dollars ($2,000) and four thousand
dollars ($4,000) in subsection (2) 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), the Reference Base
Index to be used under this subsection is the Index for October 2012.
(10) The amount of thirty dollars ($30) in subsection (8) is subject to
change under the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the
Reference Base Index to be used under this subsection is the Index for
October 1992.
(11) This subsection applies to a sale agreement entered into after
June 30, 2020. Except as provided in subsection (8), and subject to
subsection (13), in addition to the credit service charge authorized by
subsection (2), 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:
(a) seventy-five dollars ($75) for an amount financed (as defined
in section 111 of this chapter) which is two thousand dollars
($2,000) or less;
(b) one hundred fifty dollars ($150) for an amount financed (as
defined in section 111 of this chapter) which is more than two
thousand dollars ($2,000) but does not exceed four thousand
dollars ($4,000); and
(c) two hundred dollars ($200) for an amount financed (as defined
in section 111 of this chapter) 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 (as defined in IC 24-4.5-1-301.5(12)), under this subsection that exceeds the applicable
amount permitted by this subsection 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 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 24-4.5-1-106.
(12) 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 24-4.5-6-106(2)(a). A
determination by the director under this subsection:
(a) must be in writing;
(b) shall be delivered to all parties in the transaction; and
(c) is subject to IC 4-21.5-3.
(13) At the time of consummation of a consumer credit sale:
(a) the credit service charge authorized by subsection (2); and
(b) the nonrefundable prepaid finance charge authorized by
subsection (11) (including any amount charged by a depository
institution (as defined in IC 24-4.5-1-301.5(12)) that exceeds the
applicable amount set forth in subsection (11)) 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.
Formerly: Acts 1971, P.L.366, SEC.3. As amended by Acts
1981, P.L.219, SEC.1; P.L.14-1992, SEC.15; P.L.79-1998, SEC.26;
P.L.80-1998, SEC.4; P.L.10-2006, SEC.4 and P.L.57-2006, SEC.4;
P.L.145-2008, SEC.23; P.L.91-2013, SEC.1; P.L.85-2020, SEC.2;
P.L.32-2021, SEC.65.