CA AB268

Establishes mandatory examination of finance lenders and brokers at least every 48 months for compliance with California Finance Lenders Law, with authority for more frequent examinations as needed.

Creates new regulations for unsecured consumer loans of $3,000 or less, including simple interest calculations, minimum loan terms ranging from 30 to 365 days based on loan amount, and maximum charges of 15%, 12%, or 10% depending on loan size.

Requires debt-to-income ratio verification during underwriting, prohibits prepayment penalties and balloon payments, mandates credit reporting for borrowers, and allows borrowers unable to repay loans of $600 or less to request no-cost 120-day repayment plans.

Permits licensees to use commissioner-approved referral partners to bring borrowers and lenders together, with restrictions on partner activities, compensation capped at $65 per loan plus $2 per payment received, and prohibitions on passing fees to borrowers.

Establishes performance-based rate reductions after three on-time payments for loans exceeding 8.25% monthly interest, discounted rates for repeat borrowers with successful payment history, and restrictions on loan refinancing requiring 60% principal repayment and borrower's current status.