Relating to the maximum permitted sum of fees, interest, and other amounts due under certain extensions of consumer credit.
Impact
The implementation of HB1733 is expected to have a significant impact on the consumer credit landscape in Texas, particularly for low-income borrowers who often rely on high-cost credit options. By capping the fees and interest, the bill seeks to make borrowing more affordable and transparent for consumers. However, it may also affect the availability of credit, as lenders may respond by tightening their lending standards or increasing their base fees to maintain profitability. The law is designed to apply only to extensions of credit made after its effective date, which was set for September 1, 2017, ensuring that existing arrangements remain unaffected by these new limits.
Summary
House Bill 1733 addresses the maximum permitted sum of fees, interest, and other amounts that may be charged under certain extensions of consumer credit in Texas. Specifically, it aims to limit the total fees and interest that a credit access business can impose on a consumer to no more than 25% of the principal amount of the credit extension. This regulation primarily targets types of consumer credit extensions, such as deferred presentment transactions and motor vehicle title loans, thereby providing consumers with a level of protection against exorbitant lending fees.
Contention
Notably, the bill has drawn some contention as stakeholders debate the potential repercussions of such a cap on consumer credit. Proponents argue that the bill is necessary to prevent predatory lending practices that disproportionately affect vulnerable populations. Critics, however, may express concerns that restrictions on fees could lead to a decrease in credit options available to consumers, particularly to those who may not qualify for traditional loans. The balance between protecting consumers and ensuring access to credit is at the heart of the discussions surrounding HB1733.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.
Relating to a restriction on total charges charged for certain extensions of consumer credit that are facilitated by credit access businesses and entered into by consumers residing in disaster areas.
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.
Relating to amendments to the Uniform Commercial Code, including amendments concerning certain intangible assets and the perfection of security interests in those assets.