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2000 Indiana Attorney General Reports and Opinions 1 (2000)

handle is hein.sag/sagin0025 and id is 1 raw text is: STATE OF INDIANA
OFFICE OF THE ATTORNEY GENERAL
INDIANA GOVERNMENT CENTER SOUTH, FIFTH FLOOR
402 WEST WASHINGTON STREET * INDIANAPOLIS, IN 46204-2770
JEFFREY A. MODISETT                                                        ;ELEPHoNE (317) 232-6201
ATTORNEY GENERAL
January 19, 2000
Via Hand Delivery
Charles W. Phillips
Director, Department of Financial Institutions
402 West Washington Street, Room W066
Indianapolis, IN 46204
Re:   Applicability of Statutory Usury Ceilings upon Small-Dollar, Short-Term Loans
Official Opinion No. 2000-1.
Dear Mr. Phillips:
This letter responds to your request, dated October 13, 1999, for a legal opinion.
You asked several questions concerning the applicability of statutory usury ceilings and
the maximum annual percentage rate that certain short-term lenders (so-called payday
lenders or deferred-deposit lenders) may lawfully charge.
We conclude generally that lenders violate Indiana law when they offer
supervised loans having finance charges that exceed the annual percentage rates (APRs)
set out in Indiana's consumer credit code. Finance charges that exceed the statutory caps
outlined in this code are subject to refund. A transaction is void and violates Indiana's
loansharking statute if the lender charges an interest rate greater than twice the rate
authorized for finance charges in the consumer credit code.
We note, however, that there is no controlling Indiana authority on these issues.
Thus, how an Indiana court might resolve them is in doubt.
Before we begin our legal analysis, we recite the relevant background facts on
which we base our opinion.

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