Texas House Bill HB476

Texas 2025 - 89th Regular

• Filed: 11/12/24

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; creating a criminal offense.

Impact

If passed, HB 476 will directly influence the finance regulations within the state, particularly concerning how credit access businesses operate. The bill seeks to impose a standardized regulation on deferred presentment transactions which have been criticized for offering high-interest loans that can lead borrowers into cycles of debt. By establishing clear maximum rates, this bill aims to create a fairer lending environment for consumers and could potentially reduce the number of individuals taking on burdensome loans.

Summary

House Bill 476 addresses the maximum permitted rates of interest and charges associated with deferred presentment transactions in Texas, setting strict limits on what lenders can charge consumers. The legislation proposes a maximum annual interest rate of 38.5% for transactions over $300 and 36% for those of $300 or less. These rates aim to protect consumers from excessive charges in a market that can sometimes expose them to predatory lending practices. Additionally, the bill creates a criminal offense for lenders who violate the established interest rate limits, classifying such violations as a Class A misdemeanor.

Contention

One notable point of contention surrounding HB 476 could arise from the perspectives of lenders and consumer advocates. While proponents argue that the bill safeguards vulnerable consumers from predatory lending practices, opponents may contend that the capped interest rates could limit credit access, particularly for individuals with poor credit histories or those who may require immediate cash through these transactions. This tension between consumer protection and market access is likely to be a focal point during deliberations and debates on the bill.

Texas Constitutional Statutes Affected

Finance Code

• Chapter 342. Consumer Loans
  • Section: New Section

• Chapter 393. Credit Services Organizations
  • Section: New Section