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A BILL TO BE ENTITLED
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AN ACT
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relating to increasing the interest rate of certain consumer loans. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 342.201(e), Finance Code, is amended to |
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read as follows: |
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(e) A loan contract under this chapter that is not secured |
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by real property may provide for a rate or amount of interest |
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computed using the true daily earnings method or the scheduled |
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installment earnings method that does not exceed: |
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(1) 30 percent plus the federal funds rate a year on |
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that part of the cash advance that is less than or equal to the |
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amount computed under Subchapter C, Chapter 341, using the |
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reference base amount of $500; |
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(2) 24 percent plus the federal funds rate a year on |
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that part of the cash advance that is more than the amount computed |
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for Subdivision (1) but less than or equal to an amount computed |
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under Subchapter C, Chapter 341, using the reference base amount of |
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$1,050; and |
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(3) 18 percent plus the federal funds rate a year on |
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that part of the cash advance that is more than the amount computed |
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for Subdivision (2) but less than or equal to an amount computed |
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under Subchapter C, Chapter 341, using the reference base amount of |
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$2,500. |
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As used in this section, the “federal funds rate” means the rate |
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published by the Board of Governors of the Federal Reserve System in |
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its statistical release H.15 Selected Interest Rates subject to |
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section XXX. |
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SECTION 2. Section XXX: |
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(a) On September 1 and March 1 of each year, the consumer |
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credit commissioner shall compute the 342.201(e) ceilings for the |
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calendar quarter effective the following November 1 and May 1, |
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respectively. The 342.201(e) semi-annual ceilings become effective |
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for six month periods beginning on the effective dates set out in |
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this subsection and are subject to adjustment after each six month |
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period. |
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(b) The 342.201(e) semi-annual ceilings are computed by |
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averaging all of the published federal funds rates during the six |
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calendar months preceding the computation date of the ceiling. For |
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the purposes of this section, if the average computed for the |
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federal funds rate is more than five percent, the rate for the |
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purposes of calculation is five percent; if the average rate |
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computed for the federal funds rate is less than zero, the rate for |
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the purposes of calculation is zero. |
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(c) The ceiling shall be published before the 11th day after |
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the date on which the ceiling is computed. |
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SECTION 3. The change in law made by this Act applies only |
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to a loan made on or after the effective date of this Act. A loan |
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made before the effective date of this Act is governed by the law in |
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effect on the date the loan was made, and the former law is |
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continued in effect for that purpose. For purposes of this section, |
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a refinance or renewal of a loan is considered made on the date the |
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loan being refinanced or renewed was made. |
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SECTION 4. This Act takes effect September 1, 2023. |