Understanding Indiana Cash Advance Rules

The popularity of the payday loan grew out of a public need for quick cash. In this type of transaction, you are loaned funds when you actually need them and you are expected to pay these funds back about the time of your next paycheck. The qualifications needed to obtain a payday loan are far less formal than those needed in order to acquire a traditional bank loan. In simplest terms, to become a borrower you must be a working adult with a bank account. In Indiana, like other states, payday loans are regulated to insure that the borrower’s rights and best interests are protected.

Limits on Loan Terms
An Indiana Cash Advance must be made for a term of no less than fourteen (14) days. Additionally, if a borrower takes out five (5) consecutive payday loans he is required to wait at least seven (7) days after the fifth loan is paid in full before obtaining another loan. Further, no Indiana Payday Loan lender may enter into more than one loan agreement at a time with a specific borrower. The borrower of an Indiana Cash Advance may rescind his loan agreement without incurring any finance charges simply by paying the principal amount due in full, no later than the end of the next business day, following the day the loan was made.

Limits on Loan Amount and Payment
An Indiana payday lender is prohibited from making a loan to a specific borrower if the total of the amount borrowed from that payday lender, or any other, when added to the finance charges, exceeds twenty percent (20%) of the borrower’s gross monthly income. An Indiana payday lender is also prohibited from loaning a borrower funds if the principal amount of that loan, combined with the loans he has outstanding with other lenders, exceeds five hundred fifty dollars ($550.00). An Indiana Payday Loan may only be secured by a check or authorization to electronically debit a borrower’s bank account. The check or debit authorization is limited to the amount of the Indiana Cash Advance plus any applicable finance charges.

Extended Payment Plans
If a borrower has made three (3) consecutive payday loans and is not presently in default, he may request an extended payment plan. With an Indiana Cash Advance, an extended payment plan involves at least four (4) equal installment payments over a period of at least sixty (60) days. Moreover, a borrower cannot enter into another Indiana Cash Advance, while he is completing his extended payment plan.

Default on Loans
If a borrower defaults on an Indiana Payday Loan, the lender may recover the amount of the loan plus its finance charges. It can also collect a fee for any returned checks or authorizations rejected because of insufficient funds. It cannot collect its attorney fees.