Thursday, February 1, 2018


By Erin Macey, Policy Analyst

Public opinion is extremely clear: Hoosiers want to see reforms to payday lending. But HB 1319, a bill that expands what payday lenders can offer, passed a narrow vote in the House yesterday. Currently, lenders can offer installment loans only if they remain under Indiana's criminal loan sharking law, which caps fees and interest at 72% APR. This new bill would allow payday lenders to offer larger, longer-term loans at up to 222% APR. Under current law, a typical payday borrower making $16,000 qualifies for a two-week payday loan of $266 and if they take 8-10 loans in a row, they would pay about $400 in fees. Under this new bill, a borrower making $16,000 per year could qualify for a one-year loan of $1500 and pay nearly $1600 in fees.
"Calling this a credit building product is adding insult to injury. Statistically, high interest loans have higher rates of default and result in bad credit ratings. High-cost loans also allow lenders to make money even when borrowers default or enter bankruptcy. These products will do extreme damage in a state with a bankruptcy rate that is already the seventh worst in the country," said Erin Macey, Indiana Institute for Working Families. Other fictions and facts about the bill can be found here. The Indiana Military / Veterans Coalition, faith leaders, and charitable and community service organizations stood united against the bill.

All Democrats and 13 Republicans voted against the bill

Read more about this dangerous new product, public policy polling on this issue, and the Institute's research here.

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