By: Carona S.B. No. 1251
A BILL TO BE ENTITLED
AN ACT
relating to authorized charges and terms for certain consumer
loans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 342.002, Finance Code, is amended by
adding Subsection (d) to read as follows:
(d) Interest under the scheduled installment earnings
method or true daily earnings method may not be compounded.
SECTION 2. The heading to Section 342.201, Finance Code, is
amended to read as follows:
Sec. 342.201. MAXIMUM INTEREST CHARGE AND ADMINISTRATIVE
FEE.
SECTION 3. Section 342.201, Finance Code, is amended by
amending Subsection (f) and adding Subsection (g) to read as
follows:
(f) A loan contract under this subchapter may provide for an
administrative fee in an amount not to exceed the lesser of five
percent of the total amount financed or $100 [$25 for a loan of more
than $1,000 or $20 for a loan of $1,000 or less]. The
administrative fee is considered earned when the loan is made or
refinanced and is not subject to refund. An administrative fee is
not interest. A lender refinancing the loan may not contract for or
receive an administrative fee for the loan more than once in any
180-day period, except that if the loan has an interest charge
authorized by Subsection (e) the lender may not contract for or
receive the administrative fee more than once in any 365-day
period. One dollar of each administrative fee may be deposited with
the comptroller for use in carrying out the finance commission's
responsibilities under Section 11.3055.
(g) The finance commission by rule may prescribe a
reasonable amount of an administrative fee for a loan contract
under this subchapter that is greater than the amount authorized by
this section for the amount of the loan.
SECTION 4. Section 342.252, Finance Code, is amended to
read as follows:
Sec. 342.252. ALTERNATE CHARGES [INTEREST CHARGE].
(a) Instead of the charges authorized by Section 342.201, a loan
contract may provide for:
(1) on a cash advance of less than $30, an acquisition
charge that is not more than $1 for each $5 of the cash advance;
(2) on a cash advance equal to or more than $30 but not
more than $100:
(A) an acquisition charge that is not more than
the amount equal to one-tenth of the amount of the cash advance; and
(B) an installment account handling charge that
is not more than:
(i) $3 a month if the cash advance is not
more than $35;
(ii) $3.50 a month if the cash advance is
more than $35 but not more than $70; or
(iii) $4 a month if the cash advance is more
than $70; or
(3) on a cash advance of more than $100:
(A) an acquisition charge that is not more than
10 percent of the amount of the cash advance [$10]; and
(B) an installment account handling charge that
is not more than the ratio of $4 a month for each $100 of cash
advance.
(b) For an acquisition charge authorized by this
subchapter, the finance commission by rule may prescribe a
reasonable amount for an acquisition charge that is greater than
the maximum amount authorized by the applicable section of this
subchapter for the amount of the cash advance.
(c) An acquisition charge under this subchapter is not
interest.
SECTION 5. Section 342.255, Finance Code, is amended to
read as follows:
Sec. 342.255. MAXIMUM LOAN TERM. The maximum scheduled
term of a loan made under this subchapter is:
(1) for a loan of $100 or less, the lesser of:
(A) one month for each multiple of $10 of cash
advance; or
(B) six months; and
(2) for a loan of more than $100, one month for each
multiple of $20 of cash advance.
SECTION 6. Section 342.257, Finance Code, is amended to
read as follows:
Sec. 342.257. DEFAULT CHARGE; DEFERMENT OF PAYMENT. The
provisions of Subchapter E relating to additional interest for
default and additional interest for the deferment of installments
apply to a loan made under this subchapter. Provided, that on a
loan contract in which the cash advance is $100 or more, instead of
additional interest for default under Subchapter E, the contract
may provide for a delinquency charge if any part of an installment
remains unpaid after the 10th day after the date on which the
installment is due, including Sundays and holidays. The
delinquency charge on a loan with a cash advance of $100 or more may
not exceed the greater of $20 [$10] or five cents for each $1 of the
delinquent installment.
SECTION 7. Subsection (a), Section 342.259, Finance Code,
is amended to read as follows:
(a) Instead of the charges authorized by Sections 342.201
and 342.252, a loan made under this subchapter with a maximum cash
advance computed under Subchapter C, Chapter 341, using a reference
base amount that is more than $100 but not more than $200, may
provide for:
(1) an acquisition charge that is not more than 10
percent of the amount of the cash advance [$10]; and
(2) an installment account handling charge that is not
more than the ratio of $4 a month for each $100 of cash advance.
SECTION 8. Subsection (a), Section 342.352, Finance Code,
is amended to read as follows:
(a) This section applies to a loan contract:
(1) that includes precomputed interest and to which
Section 342.351 does not apply;
(2) that includes interest contracted for under
Section 342.201 or 342.260; or
(3) that has a term of more than 60 months.
SECTION 9. Subchapter F, Chapter 342, Finance Code, is
amended by adding Section 342.260 to read as follows:
Sec. 342.260. ALTERNATE INTEREST CHARGE COMPUTATION
METHODS. (a) A loan contract under this subchapter may provide
for an interest charge computed using the true daily earnings
method or the scheduled installment earnings method that does not
exceed the equivalent rate or effective return of the installment
account handling charge for the original scheduled term of the
loan.
(b) The principal balance of a loan contract authorized by
this section may not include the acquisition charge, installment
account handling charge, default charges, or deferment charges or
the return check fees authorized by Section 3.506, Business &
Commerce Code.
(c) Interest may accrue on the principal balance from time
to time unpaid at the rate provided for by the contract until the
date of payment in full or demand for payment in full.
(d) A payment on a loan contract authorized by this section
shall be applied to the borrower's account in the following order
or, at the lender's option, under another method of applying a
payment that is more favorable to the borrower:
(1) the straight line allocation of the acquisition
charge using the original scheduled term of the loan based on the
proportional scheduled payment that was paid or scheduled to be
paid;
(2) default charges authorized by Section 342.257;
(3) return check fees authorized by Section 3.506,
Business & Commerce Code;
(4) any other charges authorized by this subchapter;
(5) accrued interest authorized by this section; and
(6) principal.
SECTION 10. The changes in law made by this Act apply only
to a loan made on or after the effective date of this Act. A loan
made before the effective date of this Act is governed by the law in
effect on the date the loan was made, and the former law is
continued in effect for that purpose.
SECTION 11. This Act takes effect September 1, 2013.