Payday Lending: A Drain on Hoosier Families and Communities
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 In 2002, the Indiana General Assembly granted payday lenders an exemption to Indiana's interest rate cap of 36 percent and criminal loansharking limit of 72% APR. In just two decades, payday lenders have established a significant footprint across our state.
This update on our 2019 report shows that payday lenders drain over $29 million in finance charges from Hoosier borrowers annually on loans that average $386. Effective January 2023, the maximum payday loan increased from $605 to $715, and lenders can charge rates as high as 391% Annual Percentage Rate (APR). As the report shows, Indiana saw a precipitous drop in loan volume during 2020, likely due to robust federal support in response to the COVID-19 pandemic. Since the expiration of important federal supports such as the expanded Child Tax Credit, additional unemployment insurance, and rental assistance, payday loan volumes are trending toward their pre-pandemic levels.
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2019 Financial Drain Report
Our 2019 report, Financial Drain: Payday Lenders Extract Millions from Hoosier Communities, documents the scope and impact of these lenders on families and communities, finding:
- Payday lenders have drained over $300 million in finance charges from Hoosier families and communities in the past five years.
- There are 262 payday loan storefronts across Indiana, and out-of-state companies operate 86% of them.
- Payday storefronts are disproportionately located in low-income communities and communities of color.
- The typical payday loan borrower has a median income of just over $19,000 per year and re-borrows eight to ten times, paying more in fees than the amount originally borrowed.
- Many borrowers experience a cascade of negative consequences, include overdrafts, defaults, involuntary bank account closure, bankruptcy, and more.
 Quick Facts About Payday Lending
Payday loans trap borrowers in a cycle of high-cost debt. Learn the facts:
- The typical borrower is a renter earning less than $40,000 per year.
- 60% of payday loans are re-borrowed the same day an old loan is repaid.
- Compared to carry a balance on a credit card, a payday loan can cost 15-20 times as much.
- Payday lending can drive borrowers into bankruptcy.
- Indiana has one of the highest bankruptcy rates in the country.
- Payday lenders drain tens of millions in fees each year from Indiana's economy.
 Polling Shows Hoosiers Support Reform
Bellwether Research & Consulting asked 600 Hoosiers about payday lending:
- Nearly 90% of Hoosier voters support a 36% APR cap, even after hearing pro-industry arguments against the proposal.
- Eight-seven percent say payday loans are a "financial burden" and 84% think they are "harmful."
- Three out of four voters would oppose a new payday loan store opening in their neighborhood.
- More than one third of polling respondents had taken out or knew someone who had taken out a payday loan.; these respondents expressed similarly high levels of support for reform.
- A large & diverse coalition also supports payday lending reform in Indiana.
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Other Resources Related to Payday and Subprime Lending
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