By: Averitt S.B. No. 1429
A BILL TO BE ENTITLED
AN ACT
relating to certain agreements offered in connection with a loan.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 342.308, Finance Code, is amended by
adding Subsection (d) to read as follows:
(d) Costs that conform to Section 342.4021(a) may be added
to the loan contract.
SECTION 2. Subchapter I, Chapter 342, Finance Code, is
amended by adding Section 342.4021 to read as follows:
Sec. 342.4021. AGREEMENTS REGARDING DEBT SUSPENSION, DEBT
CANCELLATION, GAP WAIVER, AND MOTOR VEHICLE SERVICE. (a) In
connection with a loan made under this chapter that is subject to
Section 342.201(d) or 342.301(c), a lender may offer to the
borrower a debt suspension agreement or debt cancellation agreement
under similar terms and conditions as such an agreement may be
offered by a bank or savings association.
(b) In connection with a loan made under this chapter that
is subject to Section 342.201(d) and that is secured by a motor
vehicle, a lender may offer to the borrower at the time the loan is
made a gap waiver agreement, a service contract, or both.
(c) A lender may not require that a borrower accept or
provide an agreement or contract under Subsection (a) or (b).
(d) In addition to other disclosures required by state or
federal law and before offering an agreement or contract authorized
by this section, the lender shall provide to the borrower a notice
separate from the loan documents stating that the borrower is not
required to accept or provide the agreement or contract to obtain
the loan.
(e) The amount charged for a product authorized by
Subsections (a) and (b) must be reasonable.
SECTION 3. Section 342.411, Finance Code, is amended to
read as follows:
Sec. 342.411. INSURANCE OR OTHER GAIN NOT INTEREST. Any
gain or advantage to the lender or the lender's employee, officer,
director, agent, general agent, affiliate, or associate from
insurance or from another agreement or contract permitted under
this subchapter or the provision or sale of insurance or another
agreement or contract permitted under this subchapter is not
additional interest or an additional charge in connection with a
loan made under this chapter except as specifically provided by
this chapter.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.