A06506 Summary

• Creates a pilot program for unsecured installment loans of $300–$5,000 with a maximum 30% annual simple interest rate, requiring superintendent approval for program licensees and mandatory credit reporting to consumer reporting agencies.

• Establishes underwriting requirements including debt-to-income ratio limits (35% maximum), income and debt verification, and mandatory credit education offerings at no cost to borrowers.

• Permits origination fees up to 5% of principal or $75 (whichever is less), insufficient funds fees up to $25, and delinquency fees up to $14 per late payment with restrictions on frequency and total debt caps.

• Allows program licensees to use referral partners for specified services (application processing, loan disbursement, payment collection) with compensation capped at $60 per loan and $2 per payment, subject to superintendent oversight and due diligence requirements.

• Prohibits loan refinancing with additional principal advances, credit insurance sales, borrower waivers of legal rights, and debt sales to third parties within 30 days of delinquency; requires annual reporting on program usage and outcomes.

• Sunsets after five years unless renewed; becomes effective 180 days after enactment.