AL SB257

Authorizes banks and financial institutions to charge a closing fee on small loans under $1,500, limited to the lesser of 4% of the loan amount or $50.

Closing fee may be paid from the loan proceeds and financed by the lender as part of the loan amount.

Upon full prepayment of the loan, any closing fee collected is subject to refund under existing refund provisions, except the lender may retain up to $25 of the closing fee.

Closing fee is available only for loans using the alternative rate structure (acquisition charge plus installment account handling charge) under Section 5-18-15(m).

Act becomes effective immediately upon passage and approval by the Governor.