The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Nancy Vicknair.
DIGEST
SB 365 Original 2018 Regular Session Ward
Proposed law enacts the Louisiana Installment Loan Act.
Proposed law enumerates definitions for the purposes of proposed law in order to provide
for clarification.
Proposed law provides that any installment loan offered by a licensee shall adhere to the
following requirements:
(1)The term of the loan shall not be less than 6 months and shall not exceed 12 months.
(2)The amount of the loan shall not be less than $500 and shall not exceed $1500.
(a)The restriction imposed by proposed law, relative to maximum loan amounts, shall
be adjusted every other year by the Commissioner (commissioner) of the Office of
Financial Institutions (OFI) to reflect the percentage changes indicated in the most
recent Consumer Price Index (CPI) as published by the Bureau of Labor Statistics of
the Dept. of Labor.
(b)The intent of proposed law is to allow for installment loan limits to increase in
conjunction with increases in the cost of living and other market fluctuations as
represented by the CPI.
(3)A licensee is prohibited from imposing any penalty for the prepayment of an installment
loan.
(4)A licensee is prohibited from offering any installment loan that requires a total of monthly
scheduled payments that exceeds 20% of the gross monthly income of the borrower.
(a)For the purposes of determining a borrower's gross monthly income pursuant to
proposed law, a licensee shall obtain and maintain third party verification of all
income considered in making the determination.
(b)For the purposes of proposed law, "monthly" means a period extending from a given
date in one calendar month to the same date in the succeeding calendar month, or if
there is no same date in the succeeding calendar month, the last day of the succeeding
calendar month.
Proposed law provides that an installment loan may be either unsecured or secured by personal property of the borrower.
Proposed law provides that an installment loan shall include, along with any other applicable
present law requirements, the following:
(1)A next-business-day customer's right of rescission for any installment loan.
(2)A notice informing the customer that complaints may be made to the commissioner,
including the telephone number and address of the office of the commissioner.
Proposed law states that, in conjunction with an installment loan, a licensee may impose an
origination charge, to be collected upon origination, up to a maximum of 20% on the first
$300 of the loan and an additional 7.5% on any remaining loan amount not to exceed the
maximum amount allowed pursuant to the provisions of proposed law.
Proposed law states that the licensee may also impose any of the following:
(1)A monthly service charge not in excess of 7.5% of the original loan amount that is calculated
on the original loan amount and divided over the lifetime of the loan.
(2)A charge in an amount not in excess of 45% APR that is calculated on the original loan
amount and divided over the lifetime of the loan for a period not to exceed one year.
Proposed law states that, in conjunction with an installment loan, a borrower may do the following:
(1)After entering into an initial installment loan, a borrower may enter into one consecutive
unsecured loan; however, the borrower shall not be allowed to enter into any additional
consecutive unsecured loan until at least 30 days have lapsed from the conclusion of the
consecutive unsecured loan.
(2)(a)Relative to any consecutive unsecured loan described in proposed law, a borrower
may opt into an extended payment plan at no cost imposed by the licensee.
(b)The extended payment plan shall provide the borrower with an additional 60 days in
which to pay the remainder of the consecutive unsecured loan amount and allow the
borrower to pay such amount in up to a maximum of 4 separate payments.
Proposed law provides that, in the event that a borrower is delinquent in the payment of a monthly
payment pursuant to the terms of an installment loan, the licensee may charge and collect from the
borrower a late charge of 10% of the delinquent payment amount, provided that the terms of such
a charge are clearly disclosed in the installment loan agreement.
Proposed law states that no such charge as described in proposed law may be imposed against a
borrower unless the borrower has failed to pay the delinquent amount within 10 business days after
the due date. Proposed law further states, that in the event that a borrower is delinquent in the payment of a
monthly payment for more than 60 days, the licensee may charge and collect from the borrower any
of the following, provide that such penalties are clearly disclosed in the installment loan agreement:
(1)A reasonable collection charge and attorney's fees if the licensee is required to employ a third
party, including but not limited to an attorney, to collect from the borrower.
(2)Any court costs or court-awarded damages, including those incurred in any appellate
proceeding, relating to collection from the borrower.
(3)Any fees and costs incurred relating to the repossession or sale of collateral of the borrower.
Proposed law directs OFI to promulgate any rules and regulations in accordance with the
Administrative Procedure Act necessary to implement the provisions of proposed law.
Effective January 1, 2019.
(Adds R.S. 6:1371-1376)