By Thompson H.B. No. 690
77R3308 DWS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to an alternate maximum interest charge on a non-real
1-3 property loan.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 342.201, Finance Code, is amended to read
1-6 as follows:
1-7 Sec. 342.201. MAXIMUM INTEREST CHARGE. (a) A loan contract
1-8 under this chapter that is a regular transaction and is not secured
1-9 by real property may provide for an interest charge on the cash
1-10 advance that does not exceed the amount of add-on interest equal to
1-11 the amount computed for the full term of the contract at an add-on
1-12 interest amount equal to:
1-13 (1) $18 for each $100 per year on the part of the cash
1-14 advance that is less than or equal to the amount computed under
1-15 Subchapter C, Chapter 341, using the reference base amount of $300;
1-16 and
1-17 (2) $8 for each $100 per year on the part of the cash
1-18 advance that is more than the amount computed for Subdivision (1)
1-19 but less than or equal to an amount computed under Subchapter C,
1-20 Chapter 341, using the reference base amount of $2,500.
1-21 (b) As an alternative to the interest charge permitted by
1-22 Subsection (a), a loan contract under this chapter that is not
1-23 secured by real property may provide for an interest charge on the
1-24 cash advance that does not exceed 30 percent per year. On a loan
2-1 using an interest charge under this subsection:
2-2 (1) the maximum cash advance is the revised ceiling as
2-3 provided by Subchapter C, Chapter 341, using the reference base
2-4 amount of $2,500; and
2-5 (2) interest may not be precomputed and shall be
2-6 computed by the actuarial method.
2-7 (c) For the purpose of Subsections [Subsection] (a) and
2-8 (b):
2-9 (1) when the loan is made an interest charge may be
2-10 computed for the full term of the loan contract;
2-11 (2) if the period before the first installment due
2-12 date includes a part of a month that is longer than 15 days, that
2-13 portion of a month may be considered a full month; and
2-14 (3) if a loan contract provides for precomputed
2-15 interest, the amount of the loan is the total of:
2-16 (A) the cash advance; and
2-17 (B) the amount of precomputed interest.
2-18 (d) [(c)] A loan contract under this chapter that is an
2-19 irregular transaction and is not secured by real property may
2-20 provide for an interest charge, using any method or formula, that
2-21 does not exceed the amount that, having due regard for the schedule
2-22 of installment payments, would produce the same effective return as
2-23 allowed under Subsection (a) or (b) if the loan were payable in
2-24 equal successive monthly installments beginning one month from the
2-25 date of the contract.
2-26 (e) [(d)] A loan contract under this chapter that is not
2-27 secured by real property may provide for a rate or amount of
3-1 interest computed using the true daily earnings method or the
3-2 scheduled installment earnings method that does not exceed the
3-3 alternative interest rate as computed under Subchapter A, Chapter
3-4 303. Interest may accrue on the principal balance and amounts
3-5 added to principal after the date of the loan contract from time to
3-6 time unpaid at the rate provided for by the contract until the date
3-7 of payment in full or demand for payment in full.
3-8 (f) [(e)] A loan contract under this subchapter may provide
3-9 for an administrative fee in an amount not to exceed $25 for a loan
3-10 of more than $1,000 or $20 for a loan of $1,000 or less. The
3-11 administrative fee is considered earned when the loan is made or
3-12 refinanced and is not subject to refund. A lender refinancing the
3-13 loan may not contract for or receive an administrative fee for the
3-14 loan more than once in any 180-day period. Fifty cents of each
3-15 administrative fee shall be deposited with the comptroller for use
3-16 in carrying out the finance commission's responsibilities under
3-17 Section 11.305.
3-18 SECTION 2. This Act takes effect September 1, 2001.