Dear Members of the Indiana General Assembly,
 
The undersigned are writing to urge that you oppose SB 613.  As amended at the last hour in committee, this bill would flood the Indiana marketplace with egregiously expensive new lending products, as requested primarily by large out-of-state lenders. These products will induce over-stretched Hoosiers to take on more unaffordable debt, and cause greater numbers of evictions, foreclosures, loss of cars, bankruptcies, and increased mental health challenges.
 
SB 613 would add three products offering larger, longer loans at rates up to 200 percent APR or more. Two would be new products, and the third an existing product at greatly increased costs. The bill may also increase the measure of felony loansharking higher than 72 percent.  
 
Specifically, SB 613:
 
1. Expands our current two-week payday loan product (up to $605 up to 391 percent APR), by permitting payday lenders to also offer installment loans from $605 to $1500 from 6-12 months, up to about 192 percent APR.
 
2. Creates a new section of the code allowing more installment loans to be offered up to $4000 at 99 percent interest plus fees, which likely total up to 200 percent or more all-in APR.
 
3. Substantially increases the interest and fees that existing subprime installment lenders can offer, at APR rates ranging from 71 percent to over 1000 percent, depending on interpretation of the changes to loansharking statute.
 
4. Changes the definition of "loan sharking" in the criminal code, which may lift that cap from 72 percent to a substantially larger number.
 
For the past three years, the Senate has rejected expansion of payday lenders into installment products, similar to item number one above, on grounds that this is bad public policy.  
 
This year, a consortium of lenders is asking not only that you pass this payday expansion, but they are also including two additional ways in which consumers will be deluged with offers to borrow at usurious rates that they cannot afford, far in excess of Indiana's current felony loan sharking cap.
 
In Indiana, one in three Hoosiers already has a debt in collections. Hoosier consumer debt per capita is at an all-time high. Consumer debt across the country has reached a new record of four trillion dollars. The number of auto loans more than 90 days in arrears is at an all-time high. Now is not the time to enable a plunge of more Hoosiers into debt and default.
 
This issue has never been studied.  At a minimum, before undertaking a radical and expansive increase in loan products exceeding Indiana's current felony loan sharking statute, a real study should be undertaken concerning the impact of unleashing this flood of new outrageously expensive products into our economy.
 
PLEASE VOTE NO ON SB 613.

For more information, please contact Erin Macey, Policy Analyst at Indiana Institute for Working Families at emacey@incap.org or Kathleen Lara, Policy Director at Prosperity Indiana at klara@prosperityindiana.org.