Indiana Usury Laws

Indiana actually has not established a usury limitation when it comes to lending in that state. Indeed, Indiana is one of only one or two jurisdictions in the United States that lack usury limitations on loans.

With that said and understood, there is legislation in the pipeline in Indiana to establish usury limitations on certain types of loans in that state. However, as of this time, such a law has not yet been enacted in the Hoosier State. Of course, the status of legislation can change rather quickly. We do take all steps to keep the information in this article up to date. However, with the fluidity of legislation, a usury statute may be enacted by the Legislature and signed by the Governor on short notice.

The prevailing interest rate in Indiana, in the absence of actual usury laws, is 10%. Likewise, the interest rate on a civil judgment in Indiana is also set at 10%

There are some other laws on the books that, while not directly relating to usury, do regulate in other ways lending practices in the State of Indiana. Some of these laws do have some relation to personal or consumer loans. But, again, when it comes to an absolute interest gap, there is no specific general usury provision on the books in this state.

In the absence of specific statutory provisions pertaining to usury and usurious interest rates on personal loans, there is a possibility that a somewhat unrelated law could come into play when it comes to what otherwise would be usurious lending practices. For example, there is a possibility that if a person became involved in a pattern and practice of lending significantly above and beyond the prevailing interest rate in Indiana, that person might become subject to Federal RICO laws governing what commonly is known as loan sharking.

The problem is that generally speaking the Federal law governing loan sharking references a state’s usury law -- and none really technically exists in Indiana. However, it is presumed that frequent lending by one individual to another in a manner that involves interest rates well above the prevailing rate might be considered to be part and parcel of an illegal loan sharking scheme in violation of RICO.

This article is not intended to give you legal advice. If you have questions about lending laws in Indiana, or usury statutes and regulations generally, you should take the time to contact a qualified legal professional.

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