Texas House Bill HB1937

Texas 2021 - 87th Regular

Caption

Relating to the maximum permitted rate of interest, sum of fees, and other amounts that may be charged in connection with deferred presentment transactions.

Impact

If enacted, the provisions of HB1937 will amend the Finance Code by creating stricter limitations on how credit access businesses can charge for deferred presentment transactions. This change could potentially protect vulnerable populations from predatory lending practices that typically exploit consumers with high-interest loans. The bill is expected to lead to increased transparency in lending practices and ensure that borrowers are fully aware of the financial implications of their credit agreements.

Summary

House Bill 1937 establishes new regulatory measures concerning the maximum interest rates and associated charges for deferred presentment transactions in Texas. The bill specifically sets a cap on the annual percentage rate that can be charged to consumers at 36 percent. This law aims to provide clearer protections to borrowers by limiting excessive fees that can accrue from these financial agreements, particularly benefiting those who may rely on short-term loans and deferred payment options amidst financial hardship.

Contention

Debate surrounding HB1937 may arise from different perspectives on the regulation of financial practices. Advocates for the bill argue that it is a necessary measure to protect consumers from debt traps and exploitative lending, which historically become burdensome. However, opponents might express concern that high caps on interest rates could limit credit access for individuals needing urgent financial solutions. They may argue that such restrictions could deter lenders from operating in the state, ultimately reducing options for consumers at the lower end of the credit spectrum.