Texas Senate Bill SJR41

Texas 2013 - 83rd Regular

Caption

Proposing a constitutional amendment providing that certain fees charged in connection with certain consumer loans are attributable to the lender and included in the computation of interest for purposes of regulating interest rates.

Impact

The implications of SJR41 on state laws are significant, as it seeks to provide clarity on what constitutes interest in the context of consumer loans. By allowing fees from third parties to be attributed to the lender, the bill aims to prevent lenders from circumventing existing interest rate caps by imposing additional charges and thus protect consumers from exorbitant rates. Consequently, if passed, it may lead to stricter enforcement of interest rate laws and potentially impact the lending practices of financial institutions within Texas.

Summary

SJR41 is a proposed constitutional amendment aimed at redefining the computation of interest for consumer loans in Texas. Specifically, the bill proposes that certain fees charged by third parties in connection with securing consumer loans be included as part of the interest calculation. This change seeks to address concerns around interest rates that may be considered usurious, thereby influencing the regulatory framework governing consumer borrowing in the state. If enacted, the amendment would modify Section 11 of Article XVI of the Texas Constitution.

Sentiment

Discussions surrounding SJR41 indicate a divided sentiment among stakeholders. Proponents of the bill argue that it enhances consumer protection by ensuring fees are accounted for in interest calculations, thus preventing deceptive practices in loan agreements. On the other hand, opponents express concerns that this change could discourage lenders from providing loans, particularly to individuals with lower credit scores, as they may perceive the amendment as creating additional regulatory burdens.

Contention

One of the notable points of contention around SJR41 involves the potential unintended consequences it might have on loan availability and market dynamics. Critics of the bill worry that if lenders are held accountable for fees associated with loans, they may choose to tighten their lending criteria or increase rates to compensate for increased scrutiny and regulation. The debate highlights the broader tension between safeguarding consumer rights and promoting accessible lending practices in Texas.