A controversial bill regulating payday and subprime loans is dead this legislative session.
On the last day for bills to pass out of the Indiana House, the sponsor for Senate Bill 613—Rep. Matt Lehman, R-Berne—declined to call it for a vote.
“After a long discussion, there was some determination that it still needed some additional work, and we’re just out of time,” Lehman said.
The latest version of the bill would have increased allowable interest rates on traditional loans to 36 percent, plus a $150 prepaid finance charge, and created two other loan products that would have been exempt from the state’s loan-sharking rate cap of 72 percent.
The installment loans that would have been created by the legislation would have been for six to 12 months and ranged from $605 to $1,500 with interest rates of up to 192 percent.
The small-dollar loans that also were outlined in the bill would have been for at least six months for up to $3,000 with interest rates of up to 72 percent.
Lenders would not have been allowed to collect a borrower’s property, such as a car title, as a way to help pay off debt.
Proponents of the bill had argued that these new options were necessary to help consumers with low credit scores who are unable to secure traditional loans.
But consumer advocates have strongly opposed the legislation, saying the high interest rates create a cycle of debt that becomes extremely difficult to pay off.
It’s possible language addressing payday lending and subprime loans could be amended into other bills that are still alive, but Lehman downplayed that possibility and instead suggested it may be something studied over the summer.
“I doubt you’ll see parts of it pop up anywhere else,” Lehman said.