Can an Indiana lender charge whatever it wants on a personal installment loan? No. Indiana caps the finance charge. A lender that wants more than 21% a year needs a state license, and even a licensed lender tops out at about 36% on the smallest part of the balance.

An installment loan is a personal loan repaid in fixed payments over several months. If you are buying a home and one of these is on your credit report, it matters in two ways: what the loan cost you, and how your mortgage underwriter will read it.

Two ceilings, set by the lender's license

A lender without a special license is limited to 25% a year on the unpaid balance, under Indiana Code 24-4.5-3-201. It may also charge a minimum finance charge of up to $30.

Any loan priced above 21% a year counts as a "supervised loan." Only lenders licensed by the Indiana Department of Financial Institutions (DFI) can make one. Under section 24-4.5-3-508, the rate is tiered: roughly 36% on the first portion of the balance, 21% on the next, and 15% above that. The lender can instead charge a flat 25%, whichever produces more. Supervised lenders may also add a nonrefundable prepaid finance charge. Our sources give no dollar cap for that charge.

For loans made after June 30, 2020, interest must be charged on the declining balance. It cannot be computed upfront.

One change to know about: on July 1, 2026, Senate Bill 169 moved these laws out of Title 24 and into a new Title 37, "Consumer Lending." Legislative analysts describe it as a renumbering with no change in substance. Lenders have until July 1, 2027 to update their paperwork, so a contract you sign today may still cite the old section numbers.

Rule Indiana figure Source
Cap, lenders without a supervised license 25% a year IC 24-4.5-3-201
Rate that requires a supervised license Above 21% a year IC 24-4.5-3-508
Supervised tier on the first $2,000 36% LegalClarity, 2026
Supervised tier on $2,001 to $4,000 21% LegalClarity, 2026
Supervised tier above $4,000 15% LegalClarity, 2026
Minimum finance charge $30 IC 24-4.5-3-201
Minimum or maximum term and amount None found in the statutes cited Not stated
Rollovers Not addressed in our sources for installment loans Not stated

Where the cap stops applying

Banks and credit unions are generally exempt from the state ceiling because of federal preemption, meaning federal law overrides the state limit for them. That is according to The Credit People (as of September 24, 2026). None of our sources address tribal lenders or bank-partnership arrangements in Indiana, so we cannot say how common they are.

The practical protection is the license. Every other lender that regularly makes consumer loans must be licensed by the DFI, and LegalClarity reports that a loan made without a required license is void. Online lenders fall under the same rule. Check a lender at extranet.dfi.in.gov or call the DFI Consumer Credit Division at 1-800-457-8283.

On cheaper options: our sources do not cover credit union payday-alternative loans or Indiana assistance programs. Ask your own credit union directly.

Not the same as a payday loan

Indiana's short-term small loans run separately. Compacom lists them at $50 to $605 for 14 to 30 days, with APRs up to 390%. Our page on payday loans in Indiana covers those rules.

How a mortgage underwriter reads it

An underwriter will see the fixed monthly debit on your bank statements. That payment counts in your debt-to-income ratio, which is the share of your monthly income that goes to debt payments. If the loan's proceeds landed in your account recently, expect a request for a letter of explanation saying where the deposit came from.

Paying the loan off before you apply removes the payment from the ratio. The cash used to pay it off still has to be documented, though, and how each file is treated depends on your lender. Ask your loan officer before you pay anything off, not after.