Creates the Louisiana Credit Access Loan Act. (8/1/19)
The impact of SB 365 is significant in terms of consumer protection in the lending landscape. By instituting stricter regulations on credit access loans, the bill seeks to limit exploitative lending practices that disproportionately affect low-income borrowers. It restricts lenders from charging excessive fees and allows borrowers to enter into extended payment plans for additional repayment time. The act also requires lenders to rely on third-party databases to verify borrowers' financial eligibility, which is intended to prevent over-lending or predatory practices.
Senate Bill 365, known as the Louisiana Credit Access Loan Act, aims to regulate credit access loans within the state of Louisiana. The bill establishes parameters for credit access loans, defining terms, limits, and borrower rights. It mandates that loans range from $500 to $875 and prohibits terms shorter than three months or longer than twelve months. The bill also includes provisions that require lenders to provide borrowers with clear information on repayment options, late charges, and their rights to cancel loans within a specified timeframe.
The general sentiment surrounding the bill appears to be positive among consumer advocacy groups, who support measures aimed at protecting vulnerable borrowers from high-interest debt traps. However, some industry stakeholders, including certain lenders, have expressed concerns regarding the restrictions placed on loan structures and the operational impacts of additional compliance requirements. The discussion indicates a tension between consumer protection objectives and lending industry interests.
Notable points of contention in discussions about SB 365 include the balance between regulatory oversight and access to credit. Opponents of the bill argue that overly stringent regulations could limit access to necessary funds for borrowers who have limited options. The requirements for income verification and caps on loan amounts may make it difficult for some borrowers to qualify for loans. Additionally, concerns were raised regarding the implications of relying on third-party databases for borrower evaluations, including issues of data privacy and accuracy.