79R5478 HLT-F
By: Thompson H.B. No. 1088
A BILL TO BE ENTITLED
AN ACT
relating to an automobile club membership offered in connection
with a loan.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter J, Chapter 342, Finance Code, is
amended by adding Section 342.457 to read as follows:
Sec. 342.457. AUTOMOBILE CLUB MEMBERSHIP OFFERED IN
CONNECTION WITH A LOAN. (a) An authorized lender may, at the time
or after a loan under Subchapter E is made, offer to sell to the
borrower and finance in the loan contract a charge for an automobile
club membership.
(b) The lender may not require the purchase of the
membership authorized under Subsection (a) as a condition for
approval of the loan.
(c) The borrower shall provide the lender with written
acknowledgment of the borrower's intent to purchase the membership.
(d) The lender shall give the borrower written notice at the
time the loan is made that the borrower:
(1) is not required to purchase the membership as a
condition for approval of the loan; and
(2) is entitled to cancel the transaction and receive
a full refund of the purchase price of the membership before the
31st day after the date the loan is made.
(e) The commissioner shall:
(1) adopt a rule providing for disclosure in Spanish
of the information required by Subsection (d); and
(2) establish a form for the disclosure of the
information required by Subsection (d) that conforms to the plain
language and readability requirements applicable to loan contracts
under Section 341.502.
(f) The amount charged for a membership as authorized by
Subsection (a) must be reasonable.
SECTION 2. The change in law made by this Act applies only
to a loan contract made on or after the effective date of this Act.
A loan contract made before the effective date of this Act is
governed by the law in effect when the loan contract was made, and
the former law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2005.