How Much Interest is Allowed on a Loan in Indiana?

In Indiana, loans are generally capped at a maximum interest rate.  Under new legislation, most loans under $50,000 are only allowed a maximum of 21% interest.  However, higher or lower maximum interest rates are allowed in various situations.

Loans Under $50,000 Are Now Capped at 21%

In Indiana, new legislation capped the maximum interest rate for loans under $50,000 at 21%.  Generally, loans in the past in Indiana were also capped for the most part at under 25% under general usury legal concepts.  Only recently have these 21% restrictions come into place.  It also applies only to loans under $50,000 only.

Various Types of Loans Still Greatly Exceed Interests Caps in Indiana

Payday loans and online loans can still greatly exceed the 21% maximum in practical operation.  These loans are non-conventional and high interest-rate. Many providers of these loans are even located outside of the United States.  With penalties, restrictions, and other harsh terms, you may end up paying a much higher interest rate than what may be generally considered legal or acceptable in Indiana.

The 10% Judgment Rate Maximum

If you receive a lawsuit that goes to judgment, you will be required to pay interest on the judgment amount.  Generally in Indiana, the maximum you will be charged on judgment interest is 10%.  For general purposes, Indiana considers 10% interest to be a fair and equitable rate.   

Indiana’s interest rate for judgments can also help you evaluate how good of an interest rate you are receiving on a personal loan.  If you are seeking a personal loan, a rate in excess of 10% could be logically considered a high interest rate.  A rate under 10% could be considered a lower, more desirable interest rate.