Charges for supervised loans.
HB 1174 revises Indiana’s consumer credit code to create new pricing and disclosure rules for certain supervised loans beginning July 1, 2025. For smaller unsecured supervised loans of $5,000 or less, the bill allows lenders to charge a monthly service fee tied to the original principal amount, but requires the lender to report borrower payments to at least one nationwide consumer reporting agency. For larger unsecured supervised loans over $5,000 and up to $25,000, the bill creates a new flat 36% annual finance-charge option for loans with terms of at least six months, monthly installments, credit reporting, and a no-cost consumer credit education offer at or before closing.
The bill also makes conforming changes throughout the Uniform Consumer Credit Code and related statutes. It updates the definition of “supervised loan” to reflect a 36% threshold, preserves existing rules for pre-2025 loans and loans secured by land or a principal dwelling, and adjusts provisions on delinquency charges, refinancing, consolidation, prepayment rebates, insurance charges, pawnbroker interest limits, and loansharking penalties. It also requires the Department of Financial Institutions to publish annual composite data on certain supervised loans made by nondepository licensees, increasing public reporting on loan volume and principal ranges.
The overall sentiment reflected in the legislative history is mixed but favorable enough for advancement. The House Financial Institutions Committee reported the bill “Do Pass” on a 7-5 vote, indicating notable support but also substantial opposition. The full House later passed the bill on third reading by a narrower 51-46 vote, suggesting the measure was controversial and closely divided among members.
The main points of contention appear to be the bill’s expansion and restructuring of permissible charges on supervised loans, especially the move from the prior 25% benchmark to 36% and the addition of monthly service fees for smaller loans. Supporters likely viewed the bill as a modernization of consumer lending rules paired with added reporting and education requirements, while opponents likely objected to higher allowable costs for borrowers and the potential for increased debt burdens. The credit-reporting mandate, consumer education requirement, and public reporting provisions may have been intended to address those concerns, but the close votes indicate disagreement over whether the consumer protections were sufficient.
HB 1174 would amend multiple sections of the Indiana Code governing consumer loans, supervised loans, consumer-related loans, pawnbrokers, and loansharking. Its most significant legal effect is to create new supervised-loan categories and pricing rules for certain unsecured loans made after June 30, 2025, while raising the general supervised-loan rate benchmark to 36% and authorizing additional monthly service fees for smaller loans. It also imposes new reporting, education, and disclosure obligations on lenders and directs the Department of Financial Institutions to publish annual composite loan data, thereby increasing regulatory oversight and public transparency.
The bill appears to have generated divided reactions in the legislature. It cleared the House Financial Institutions Committee on a 7-5 vote and then passed the House on third reading by 51-46, which suggests the proposal had enough support to advance but faced meaningful bipartisan or intra-party resistance. The narrow margins indicate that lawmakers were split between those favoring expanded lending flexibility and those concerned about borrower costs and consumer protection.
The central controversy is the bill’s authorization of higher finance charges and new monthly service fees on supervised loans, which critics may view as increasing the cost of credit for lower- and moderate-income borrowers. Another likely point of dispute is whether the added requirements—credit reporting, consumer education offers, and annual public reporting—adequately offset the expanded pricing authority. Supporters seem to have emphasized access to credit, standardized rules, and transparency, while opponents likely focused on the risk of predatory lending or higher debt burdens, especially given the bill’s changes to the supervised-loan framework and related loan-sharking thresholds.