Currently, 15 states, the District of Colombia and the military already cap payday loans at 36 percent or less.
The institute said if Indiana joins them, consumers will end up paying much less to pay back a loan.
“They will have less stress and more money in their pocket,” said Erin Macey, a policy analyst with the Indiana Institute for Working Families. “We expect to see borrowers paying a lot less, and we expect communities that are more financially strong.”
The payday lending industry is expected to oppose the bill.
"To be clear, this may mean many payday stores might close,” said Macey. “Payday lenders do not prefer to lend at 36 percent. So, this would push borrowers into installment loans at 36 percent that are much more affordable."
The Indiana Catholic Conference is among the groups that plans to voice its support for Walker’s legislation.
“Our interest is we see needy families being taken advantage of," said Glenn Tebbe, executive director of the Indiana Catholic Conference.
Their charities end up helping people who took out payday loans.
“The trap is there and these families are hurting as a result of it,” said Tebbe.
Call 6 Investigates contacted the Community Financial Services Association of America, a national trade association for companies that offer small dollar, short-term loans or payday advances.
CFSA has not yet issued a response to Call 6 Investigates regarding Walker’s legislation.
To avoid the debt trap:
Read the fine print before you sign
Ask friends, family for help first
Try using your credit card to pay bills
Negotiate with creditors
Negotiate payment plans with your power company, hospitals, and others