What Is the Uniform Consumer Credit Code in Indiana?

The Indiana Uniform Consumer Credit Code is the state law, found in Indiana Code Title 24, Article 4.5, that governs most consumer lending in Indiana. It caps finance charges, requires lenders to disclose the real cost of credit before you sign, and gives you concrete remedies when a lender overcharges or operates without a license. In the strongest case, a loan made by an unlicensed lender who was required to be licensed is void, meaning you owe nothing back.¹

Which Loans the Code Covers

The UCCC reaches credit extended for personal, family, or household purposes. A consumer loan under the statute is any loan where a finance charge is imposed or the debt is payable in more than four installments, which sweeps in payday loans, auto financing, and unsecured personal loans.²

Retail installment contracts are covered too. If you finance furniture, appliances, or electronics through the seller, that seller follows the same rate caps and disclosure rules as a bank. Revolving store credit cards fall under the code as well. Leases structured to function like credit transactions, including many rent-to-own agreements, get pulled in regardless of what the contract calls itself. Home improvement financing where a contractor extends credit directly to a homeowner is another area the code reaches.

Business loans and commercial credit are not covered. The code is about household borrowing.

Rate Caps on Consumer Loans

Finance charge limits are one of the most concrete protections in the UCCC. The rules split based on whether the loan is a regular consumer loan or a “supervised loan.”

Regular Consumer Loans

For consumer loans that are not supervised loans, Indiana Code 24-4.5-3-201 sets the maximum finance charge, calculated on unpaid principal balances.³

Supervised Loans

A supervised loan is any consumer loan with a finance charge above 25% per year.⁴ These higher-cost loans face a tiered ceiling under Indiana Code 24-4.5-3-508:

Up to 36% per year on the first $2,000 of unpaid principal
Up to 21% per year on amounts from $2,001 to $4,000
Up to 15% per year on amounts over $4,000

As an alternative, the lender may charge a flat 25% per year on the entire unpaid balance if that produces a higher amount. The lender gets whichever calculation is greater but cannot exceed either ceiling. On smaller supervised loans, the lender may also contract for a minimum finance charge of up to $30, but only if no nonrefundable prepaid finance charge is assessed.⁵

If you see a finance charge above these caps, the lender is in violation, and the excess is refundable.

Your Rights as a Borrower

Clear Disclosures Before You Sign

A lender making a consumer loan in Indiana must give you the disclosures required by the federal Consumer Credit Protection Act (which includes the Truth in Lending Act). That means a written breakdown of the annual percentage rate, total finance charges, repayment schedule, and all fees, before you commit.⁶

The Right to Pay Early Without a Penalty

You can pay off a consumer loan early without a prepayment penalty. The one exception is a loan secured primarily by an interest in land, where the lender may charge a penalty of up to 2% of the prepaid amount. Even that penalty cannot be imposed if you refinance with the same lender, if the prepayment comes from insurance proceeds or acceleration after default, or if more than three years have passed since the contract date.⁷

Refunds for Any Excess Charge

If a lender charges you more than the UCCC allows, you are not obligated to pay the excess. You are entitled to a refund, as either a credit against your balance or a cash reimbursement. If the lender refuses to refund the overcharge after you demand it, you can sue for a penalty of the greater of 10 times the excess amount or the total finance charge on the loan.¹

Late fees are allowed, but only if they were disclosed in the original loan agreement. A lender cannot add new fees or raise charges after the loan is issued without authorization in the original contract.

Protection From Loan Sharking

Indiana Code 24-4.5-5-107 makes extortionate loans unenforceable in court. If a loan was made with the understanding that failure to repay could result in violence or other criminal harm, no court will help the lender collect. When a loan carries interest above 45% and the lender has a reputation for using threats or violence to collect, the law presumes the loan is extortionate.⁸

What Happens When a Lender Breaks the Rules

The UCCC provides some of the strongest borrower remedies in Indiana consumer law. The remedy depends on which rule the lender violated.

Lending Without a Required License

This is the most severe outcome. If a lender was required to hold a UCCC license and made a loan without one, the loan is void. You owe nothing, not principal and not finance charge, and any payments already made are recoverable from the lender.¹

Violating Payment Schedule or Loan Term Rules

If a supervised lender violates the limitations on payment schedules or loan terms under Indiana Code 24-4.5-3-511, the borrower does not owe the finance charge at all, and the court can award a penalty of up to three times the finance charge amount.¹

Overcharges

Any charge above what the UCCC permits must be refunded. If the lender refuses after a reasonable demand, the borrower can recover a penalty equal to the greater of the entire finance charge or 10 times the excess. Even where the lender eventually refunds the overcharge, the penalty can still apply if the violation was deliberate or reckless.¹

Attorney’s Fees

In any case where a court finds a UCCC violation, it may award the borrower reasonable attorney’s fees. That often decides whether a lawsuit over a disputed finance charge is economically possible in the first place.¹

Regulatory Action

On the regulatory side, the Indiana Department of Financial Institutions can assess administrative fines of up to $10,000 per violation, suspend or revoke a lender’s license, and issue cease-and-desist orders.⁹ In the most extreme cases, such as knowingly charging usurious rates or falsifying loan documents, criminal charges may follow.

If You Were Fired Over a Garnishment

Indiana’s UCCC also protects employees from retaliatory firing tied to consumer debt. If your employer fired you because your wages were garnished over a consumer debt, you have six months to file a civil action seeking reinstatement and up to six weeks of lost wages.¹

Which Lenders Must Be Licensed

Banks, credit unions, and subsidiaries of depository institutions regulated by a federal banking agency do not need a UCCC license. Everyone else who regularly makes consumer loans, takes assignment of consumer loans, or directly collects on consumer loan debts must be licensed by the Indiana Department of Financial Institutions.¹⁰

Before you borrow from a finance company, payday lender, or similar non-bank lender, you can confirm licensing with the DFI. If the lender is not licensed and was required to be, the loan is void.

Federal Protections That Stack on Top

The UCCC does not sit alone. Several federal laws add protections on top of what Indiana provides.

The federal Truth in Lending Act’s Regulation Z gives borrowers a three-day right to cancel certain credit transactions secured by their principal home, such as home equity loans or lines of credit. The right does not apply to purchase-money mortgages or loans secured by a vacation home. To use it, you send written notice to the lender within three business days of closing.¹¹

The federal Fair Debt Collection Practices Act covers abusive collection tactics by third-party debt collectors, including threats, obscene language, repeated harassing calls, and misrepresentations such as falsely claiming to be an attorney. Under Regulation F, collectors are limited to seven calls per debt within a seven-day period.

The federal Equal Credit Opportunity Act requires lenders who deny your application or take other adverse action to send a notice explaining the specific reasons (up to four) and identifying the source of any credit report used.

One tax consequence catches many borrowers off guard. If a lender settles your debt for less than you owe, the IRS generally treats the forgiven amount as taxable income reportable on your federal return for the year of cancellation. Exceptions include debts canceled as gifts, certain qualified student loan forgiveness tied to employment in specific professions, and amounts that would have been deductible had you paid them as a cash-basis taxpayer.¹²

Where to File a Complaint

The Indiana Department of Financial Institutions investigates complaints against licensed lenders and enforces the UCCC. If your dispute involves deceptive practices beyond lending itself, the Indiana Attorney General’s Consumer Protection Division can pursue claims under the Indiana Deceptive Consumer Sales Act, which prohibits unfair or misleading conduct in consumer transactions.¹³

Indiana Legal Services offers free or low-cost help with predatory lending disputes and debt collection problems. The Consumer Financial Protection Bureau handles complaints involving federal lending law. Act quickly: legal time limits restrict how long you have to bring a claim, and the wrongful termination provision has a strict six-month filing deadline.

1
Indiana General Assembly. Indiana Code 24-4.5-5-202 – Effect of Violations on Rights of Parties
2
Justia. Indiana Code Title 24 Article 4.5 – Uniform Consumer Credit Code
3
Indiana General Assembly. Indiana Code 24-4.5-3-201 – Loan Finance Charge for Consumer Loans Other Than Supervised Loans
4
Indiana General Assembly. Indiana Code 24-4.5-3-501 – Definitions
5
Indiana General Assembly. Indiana Code 24-4.5-3-508 – Loan Finance Charge for Supervised Loans
6
Indiana General Assembly. Indiana Code 24-4.5-3-301 – Disclosures Required by Consumer Credit Protection Act
7
Indiana General Assembly. Indiana Code 24-4.5-3-209 – Right to Prepay
8
Indiana General Assembly. Indiana Code 24-4.5-5-107 – Extortionate Extensions of Credit
9
Indiana Department of Financial Institutions. 750 IAC 10 Regulatory Analysis
10
Indiana General Assembly. Indiana Code 24-4.5-3-502 – Authority to Make Consumer Loans; License Required
11
Consumer Financial Protection Bureau. Regulation Z 1026.23 – Right of Rescission
12
Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not?
13
Indiana General Assembly. Indiana Code 24-5-0.5-3 – Deceptive Acts Prohibited