Coalition Urges the Indiana State Senate to Vote No on SB 352 to Protect Hoosier Consumers
For Immediate Release
January 24, 2022
Contact: Natalie James, (317) 222-1221 ext.406, njames@prosperityindiana.org
Coalition Urges the Indiana State Senate to Vote No on SB 352 to Protect Hoosier Consumers
INDIANAPOLIS, IN – Hoosiers for Responsible Lending (HRL) is urging the Indiana General Assembly to cap loan rates and vote no on Senate Bill 352, Supervised Consumer Loans, as it is currently written. SB 352, authored by Senator Andy Zay (R-Huntington) and coauthored by Sen. Mike Bohacek (R-Michiana Shores), will drastically change subprime, high-cost installment lending across Indiana by increasing the finance charges and fees, compared to current law. This problematic legislation will allow lenders to aggressively push borrowers to refinance these installment loans as often as possible and ultimately does not provide guardrails to protect consumers.
Hoosiers will experience harmful effects, including constraining credit as borrowers may need to take out multiple loans through multiple lenders to meet larger credit needs, also known as loan stacking. This will substantially raise the cost of credit. Additionally, SB 352 does not require lenders to report loans to credit bureaus, meaning borrowers receive no credit for successfully paying off a loan and demonstrating creditworthiness. By not allowing borrowers to receive favorable reporting on their credit reports if they successfully repay a loan, a self-fulfilling cycle is created where the borrower’s only option is subprime loans.
The Pew Charitable Trusts, a global nongovernmental organization, released a letter stating, “We find that the bill would expose Indiana consumers to financial harms, rather than create an affordable loan market.”
The letter continued. “Most notably, SB 352 does not effectively address problems with Indiana’s current payday loan statute. The bill would enable high-rate and larger installment loans with payments that exceed what research has found most borrowers can afford and that have been shown to replicate the core problems that exist in the payday loan market, where lenders maintain a strong ability to collect payments despite borrowers’ inability to repay. Such large payments make it difficult for consumers to cover other expenses, drive high rates of repeated financing, and do not result in meaningful consumer savings.”
Steve Hoffman, President of the Indiana Community Action Association and HRL member, said in a recently released op-ed, “What I think is clear is that this industry, besides damaging the financial situation of borrowers themselves, comes with a tremendous public cost. The public is in fact subsidizing the fees and interest that these lenders charge. We know that two-thirds of payday borrowers eventually pay off their loans only with outside help (this is self-reported, I would venture to guess the figure is even higher if we really analyzed the assistance these households are receiving). This help comes from social service organizations, township trustees, family, and friends. These resources originate from individual donations, taxpayers, and citizens that want to help their loved ones. The pubic is massively subsidizing the $40 million annually in fees and interest that this industry generates each year.”
The Coalition believes that SB 352 expands predatory lending in Indiana, fuels a debt trap, and will have negative impacts on financially vulnerable Hoosiers and their families. HRL urges the Indiana State Senate to vote no on SB 352, as it is currently written, and oppose this legislation.
View examples of SB 352 dangerously increasing basic costs of borrowing for Hoosiers over current law.
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About Hoosiers for Responsible Lending
Hoosiers for Responsible Lending was created by a network of advocates working to empower Hoosiers who have been affected by any form of predatory lending. HRL raises awareness of predatory practices across Indiana in order to hold lenders accountable and create attainable pathways to wealth building for all Hoosiers. The alliance includes veterans organizations, faith communities, consumer groups, and social service providers who recognize both the benefits of equitable, responsible lending and the damages of predatory lending.