Texas Senate Bill SB2277

Texas 2019 - 86th Regular

Caption

Relating to increasing the interest rate and maximum reference base amount of certain consumer loans.

Impact

If enacted, SB2277 is expected to modify how lenders can charge interest on loans, potentially increasing costs for consumers taking out these types of loans. The adjustments to the interest rates and cash advance limits may lead to a greater variety of loan products and terms available to Texans, but it raises concerns around consumer debt burdens and the potential for higher default rates due to the increased cost of borrowing.

Summary

SB2277 proposes amendments to the Finance Code of Texas, particularly concerning the regulation of consumer loans. The bill aims to increase the interest rates allowed on certain unsecured loans and adjusts maximum reference base amounts, effectively raising the cap on how much consumers can borrow under specific circumstances. The proposed changes include a shift from a maximum annual interest rate of 30% to 36% for lower cash advances and alterations to the maximum cash advance reference amounts, allowing for up to $300 for certain loans.

Contention

The discussion around SB2277 has sparked debates regarding its implications for consumer protection. Supporters argue that the legislation is necessary to provide lenders with more flexibility and to adapt to current economic conditions, thus promoting accessibility to credit. However, critics are concerned that raising interest rates could disproportionately affect low-income borrowers who rely on these types of loans. Furthermore, questions have been raised about the adequacy of borrower protections and whether the bill provides sufficient safeguards against predatory lending practices.