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IN SB0587
Bill
AI Summary
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Increases the maximum loan finance charge for consumer loans from 25% to 36% per year and establishes a flat 36% credit service charge cap for consumer credit sales, replacing the current tiered rate structure based on outstanding balance amounts
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Raises minimum finance charges from $30 to $50 for both credit service charges and consumer loan finance charges, and increases the maximum nonrefundable prepaid finance charge from $50 to $150 (for loans under $5,000) or $250 (for loans of $5,000 or more)
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Increases the security interest threshold from $300 to $1,500 for sellers taking security interests in goods during consumer credit sales, and raises the property insurance requirement threshold from $300 to $1,000
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Repeals the separate "supervised loan" category and its associated provisions, instead applying certain supervised loan restrictions to any consumer loan with a finance charge exceeding 25% per year
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Eliminates the Consumer Price Index-based automatic adjustment mechanism for dollar amounts in consumer lending statutes, effective July 1, 2019
Legislative Description
Consumer credit. Repeals provisions specifying indexing of and changes of dollar amounts for purposes of consumer loans. Provides for a credit service charge not to exceed 36%. (Current law provides for variation in amount of a credit service charge based on the amount outstanding.) Increases the minimum credit service charge and consumer loan finance charge from $30 to $50. Increases from at least $300 to at least $1,500 the debt that must be secured for a seller in a consumer credit sale of goods to take a security interest in the goods. With respect to consumer loans: (1) increases from 25% to 36% the amount of a loan finance charge that a lender may charge; (2) increases from 2.083% to 3% the amount in relation to the debt on a revolving loan account over which the loan finance charge is considered to exceed the maximum annual percentage rate; (3) strikes a provision specifying requirements for charging the same loan finance charge on all amounts financed within a range; (4) increases from $50 the maximum amount of a nonrefundable prepaid finance charge to $150 or $250; and (5) increases from two to three the number of nonrefundable prepaid finance charges a lender may assess in a 12 month period. Repeals provisions specific to supervised loans and applies certain supervised loan provisions to consumer loans having a loan finance charge exceeding 25%, including increasing the principal amounts on which the term of an installment payment period depends. Increases the amount that must be financed before a creditor can require property insurance. Makes conforming amendments.
Last Action
Senator Gaskill added as second author
2/18/2019