Small-dollar, short-term advances are permitted throughout Indiana, though they carry steep charges. These brief loans come with significant costs. This resource breaks down their mechanics using straightforward terms.
How does a payday advance function?
A payday loan is a small cash loan you promise to repay with your next paycheck. You write a check for the amount you borrow plus a fee. The lender holds the check until your next payday. Then they cash it. You can also authorize an electronic withdrawal from your bank account.
These loans are also called cash advances or check loans. They are for emergency costs only, like a car repair or a medical bill.
What will an Indiana payday advance set you back?
Indiana uses a tiered fee structure that limits costs slightly. The fee is 15% on the first $250 you borrow. It is 13% on the next $250. It is 10% on any amount above $500.
The total cost is shown as an Annual Percentage Rate (APR). APR is the cost of borrowing for a full year. A 14-day loan has a very high APR because the fee is for a short time.
State law sets a maximum APR of 391%. This is the highest cost a lender can charge.
| Loan amount | Term | Typical fee | Total cost | APR |
|---|---|---|---|---|
| $100 | 14 days | $15.00 | $115.00 | 391% |
| $300 | 14 days | $44.99 | $344.99 | 391% |
| $500 | 14 days | $74.99 | $574.99 | 391% |
Which regulations govern Indiana payday advances?
State law sets clear rules to protect borrowers. Lenders must follow these rules.
The most you can borrow is $605. The loan cannot last longer than 14 days. A lender cannot let you "roll over" or extend your loan. You must pay it back in full first.
There is also a cooling-off period. After you pay back a loan, you must wait 7 days before taking another one from the same lender.
All licensed lenders must check a state database before giving a loan. This system stops you from having too many loans at once. It enforces the rules.
What happens when you miss the repayment deadline?
This is a serious situation. You should contact your lender immediately to discuss options.
Indiana law prohibits rollovers. This means a lender cannot simply extend your due date for an extra fee. You must pay the loan back.
If you cannot pay, the lender may cash your check or withdraw from your account. If there are not enough funds, you will face bank fees. The lender may also use a collection agency.
It is important to know your rights. You can file a complaint with the Indiana Department of Financial Institutions if you believe a lender broke the law.
Where can you find less costly borrowing options?
Always look at alternatives first. They typically cost 80–95% less than a payday loan.
- Ask your employer for an advance. Some companies will give you an advance on your next paycheck for no fee.
- Use a credit union small loan. Some credit unions offer small, short-term loans to members. For example, Bank Simple Loan, Wells Fargo Flex Loan, and Truist QuickLoan lend $100–$1,000 to existing checking customers. Approval rests on direct-deposit history, not a credit score; APRs run roughly 100–200%.
- See if you qualify for an EITC advance. If you have a tax refund coming, you can get it fast. VITA prepares Indiana returns for free at incomes below about $60,000. The EITC can add $1,000–$6,400 to a refund.
- Contact a local legal aid society. The Indiana Bar referral service points borrowers to consumer-rights attorneys. This can help if a lender has violated state law.
Steps to submit a grievance about an Indiana lender
Filing a complaint with the Indiana Department of Financial Institutions costs nothing and needs no lawyer. This is the state regulator for payday lenders.
You can complain if a lender charged too high a fee, did not follow the cooling-off rule, or gave you a loan without checking the database. Most complaints resolve within 30–60 days.
You can find the complaint portal on the department's website.
Pre-borrowing checklist: what to verify first
Follow these steps to make a careful decision.
- Calculate the exact dollar fee you will pay on the amount you need.
- Check your budget. Be sure you can pay back the full amount on your next payday.
- Call your local Fort Wayne credit union or bank to ask about small loan options.
- Explore all the alternatives listed above.
- If you decide to proceed, read the loan agreement carefully before you sign.
Frequently Asked Questions: Indiana Payday Advances
Can I have more than one payday loan at a time in Indiana?
No. The state database system will block a licensed lender from giving you a new loan if you already have one outstanding. This is enforced by law.
What is the Military Lending Act?
It is a federal law that protects active-duty service members and their families. It caps the APR on payday loans at 36% for covered borrowers. This is much lower than Indiana's 391% cap for civilians.
Is there a cooling-off period between loans?
Yes. After you repay a payday loan in full, you must wait 7 days before taking another loan from the same lender. This is a state rule designed to prevent debt cycles.
What happens if my check bounces?
You will be responsible for the amount of the loan plus the fee. You will also likely face fees from your bank for a non-sufficient funds (NSF) charge. The lender may also charge a returned item fee.
Where can I learn more about how these loans work?
Our main guide on payday loans covers the basics in more detail. It is a good place to start if this is your first time considering one.