HB 554 Summary

• Establishes the Installment Loan Act (sections 1322.21 to 1322.38) requiring persons making installment loans of $100-$5,000 with 90+ day repayment terms to obtain a license from the superintendent of financial institutions, effective January 1, 2011.

• Caps interest rates at 25% per year on unpaid principal balances and authorizes only specific additional fees (loan origination, credit report, renewal fees) subject to superintendent-established maximums.

• Requires written loan contracts with clear disclosure of loan terms, costs, payment schedules, security type, and a warning statement comparing costs to other lenders; prohibits prepayment penalties and requires refunds for early repayment.

• Prohibits loan refinancing on the same day a previous loan is paid off, restricts monthly payments to 25% of borrower's monthly gross income, and grants borrowers a one-business-day rescission right without penalties.

• Establishes financial literacy education fund supported by 1% quarterly assessments on licensee loan revenue; requires fair debt collection practices and creates superintendent authority to examine licensees, issue cease-and-desist orders, and suspend or revoke licenses for violations.