Texas Senate Bill SB1251

Texas 2013 - 83rd Regular

Caption

Relating to authorized charges and terms for certain consumer loans.

Impact

The changes implemented by SB1251 signify a critical shift in how consumer loans are regulated in Texas, potentially reducing the financial burden on borrowers by limiting excessive fees and interest accumulation. By capping administrative fees at specified amounts, the bill helps to protect consumers from unexpected financial charges that might arise during the lifecycle of a loan. The specified maximum loan term provisions also aim to provide clearer guidelines for lenders and borrowers, allowing them to better manage their financial commitments.

Summary

SB1251 relates to the authorized charges and terms for certain consumer loans. The bill introduces amendments to the Finance Code, particularly focusing on interest charges and administrative fees associated with consumer loans. Key changes include provisions that prohibit the compounding of interest under specific methods and set maximum limits on administrative fees that can be charged by lenders. These alterations aim to standardize and clarify the terms under which consumer loans are provided in the state of Texas, ensuring greater transparency for borrowers.

Contention

There is potential contention surrounding the amendments proposed by SB1251, particularly from lenders who may feel constrained by the limitations placed on fees and interest calculations. Opponents of the bill may argue that these restrictions could reduce the availability of credit for consumers, particularly for those seeking smaller loan amounts. This balance between consumer protection and the interests of lenders will be crucial in determining the overall effectiveness and reception of the bill within the financial services industry.