§ 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 lender

Loan 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).
Formerly: Acts 1971, P.L.366, SEC.4. As amended by Acts
1981, P.L.219, SEC.4; Acts 1982, P.L.149, SEC.4; Acts 1982, 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; P.L.91-2013,
SEC.4; P.L.159-2017, SEC.14; P.L.85-2020, SEC.16; P.L.29-2022,
SEC.6.