Kansas House Bill HB2242

Kansas 2023-2024 Regular Session

• Introduced: 1/31/23
• Refer: 1/31/23
• Failed: 4/30/24

Caption

Providing restrictions, lender reporting and other requirements for alternative small installment loans made under the UCCC.

Impact

The implementation of HB 2242 aims to elevate consumer protection by preventing predatory lending practices that have become prevalent with alternative small installment loans. By enforcing limits on interest rates and requiring clear, upfront disclosures about fees and terms, this legislation seeks to mitigate the financial burden on consumers who often find themselves trapped in cycles of debt. The bill will also require lenders to maintain a detailed log of transactions, thus fostering greater transparency in lending practices.

Summary

House Bill 2242 introduces significant amendments to the Kansas Uniform Consumer Credit Code, particularly revolving around consumer loans and small installment loans. The bill particularly addresses loans of $2,500 or less and sets strict guidelines regarding the interest rates and fees that lenders can charge. Notably, the bill stipulates that lenders cannot charge a periodic finance charge that exceeds 36% per annum for open-end credit or a maximum of 15% for cash advances on layaway or short-term loans. Moreover, the maximum charge for loans of $1,000 or less is capped at a predetermined percentage depending on the loan duration and paid in equal installments over specified periods, thereby ensuring clearer, fairer terms for consumers.

Contention

Despite its protective intentions, there are points of contention surrounding HB 2242. Some critics argue that the stringent regulations may limit access to credit for individuals who rely on quick capital through small loans during emergencies. Additionally, there are concerns from the lending community about the potential for increased operational costs and challenges that may arise due to compliance with the extensive reporting and documentation requirements mandated by the bill. Stakeholders are divided on whether the bill will effectively safeguard consumers without unduly constraining the availability of credit.