By: Lambert H.B. No. 4219
A BILL TO BE ENTITLED
AN ACT
relating to increasing the interest rate of certain consumer loans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 342.201(e), Finance Code, is amended to
read as follows:
(e) A loan contract under this chapter that is not secured
by real property may provide for a rate or amount of interest
computed using the true daily earnings method or the scheduled
installment earnings method that does not exceed:
(1) 30 percent plus the federal funds rate a year on
that part of the cash advance that is less than or equal to the
amount computed under Subchapter C, Chapter 341, using the
reference base amount of $500;
(2) 24 percent plus the federal funds rate a year on
that part of the cash advance that is more than the amount computed
for Subdivision (1) but less than or equal to an amount computed
under Subchapter C, Chapter 341, using the reference base amount of
$1,050; and
(3) 18 percent plus the federal funds rate a year on
that part of the cash advance that is more than the amount computed
for Subdivision (2) but less than or equal to an amount computed
under Subchapter C, Chapter 341, using the reference base amount of
$2,500.
As used in this section, the “federal funds rate” means the rate
published by the Board of Governors of the Federal Reserve System in
its statistical release H.15 Selected Interest Rates subject to
section XXX.
SECTION 2. Section XXX:
(a) On September 1 and March 1 of each year, the consumer
credit commissioner shall compute the 342.201(e) ceilings for the
calendar quarter effective the following November 1 and May 1,
respectively. The 342.201(e) semi-annual ceilings become effective
for six month periods beginning on the effective dates set out in
this subsection and are subject to adjustment after each six month
period.
(b) The 342.201(e) semi-annual ceilings are computed by
averaging all of the published federal funds rates during the six
calendar months preceding the computation date of the ceiling. For
the purposes of this section, if the average computed for the
federal funds rate is more than five percent, the rate for the
purposes of calculation is five percent; if the average rate
computed for the federal funds rate is less than zero, the rate for
the purposes of calculation is zero.
(c) The ceiling shall be published before the 11th day after
the date on which the ceiling is computed.
SECTION 3. The change in law made by this Act applies 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. For purposes of this section,
a refinance or renewal of a loan is considered made on the date the
loan being refinanced or renewed was made.
SECTION 4. This Act takes effect September 1, 2023.