Texas House Bill HB2813

Texas 2021 - 87th Regular

Caption

Relating to a restriction on total charges charged for extensions of consumer credit that a credit services organization obtains for a consumer or assists a consumer in obtaining.

Impact

The implementation of this bill will amend Chapter 393 of the Texas Finance Code, which governs the operations of credit services organizations. By establishing a cap on interest rates and overall charges, the bill intends to safeguard consumers from predatory lending practices that can lead to high debt burdens. The legislation is particularly significant for low-income individuals and families who may have limited access to conventional credit options. This move is expected to foster a more equitable lending environment in Texas.

Summary

House Bill 2813 aims to introduce restrictions on the total charges that a credit services organization can impose when obtaining consumer credit for individuals. The legislation stipulates that the annual percentage rate for these loans, which encompasses all associated fees and charges, cannot exceed 36%. This policy is designed to provide greater transparency and protection for consumers who rely on credit services to access loans, particularly those who may be vulnerable to high-interest rates and exploitative lending practices.

Contention

There is potential for contention surrounding HB 2813, especially among stakeholders in the financial services industry who may argue that such rate caps could limit their ability to offer credit to higher-risk consumers. Critics from the lending sector may express concerns that this regulation could lead to reduced access to credit for those who need it most, as lenders may seek to mitigate risk through higher rates. Advocates for consumer protections, however, commend the bill for addressing issues of economic disparity and safeguarding consumers from the risk of falling into debt traps due to exorbitant interest rates.