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A BILL TO BE ENTITLED
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AN ACT
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relating to restrictions in connection with motor vehicle title |
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loans that a credit access business obtains for a consumer or |
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assists a consumer in obtaining. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Subchapter C-1, Chapter 393, |
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Finance Code, is amended to read as follows: |
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SUBCHAPTER C-1. [NOTICE AND DISCLOSURE] REQUIREMENTS FOR CERTAIN |
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CREDIT SERVICES ORGANIZATIONS AND RESTRICTIONS PERTAINING TO |
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CERTAIN EXTENSIONS OF CONSUMER CREDIT FACILITATED BY THE |
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ORGANIZATIONS |
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SECTION 2. Subchapter C-1, Chapter 393, Finance Code, is |
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amended by adding Section 393.225 to read as follows: |
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Sec. 393.225. RESTRICTIONS PERTAINING TO CERTAIN MOTOR |
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VEHICLE TITLE LOANS. (a) This section applies only to an extension |
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of consumer credit in the form of a motor vehicle title loan that a |
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credit access business obtains for a consumer or that a credit |
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access business assists a consumer in obtaining. |
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(b) The cash advanced under the extension of consumer credit |
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may not exceed 70 percent of the retail value of the motor vehicle. |
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(c) If the extension of consumer credit is payable in a |
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single payment, the consumer must make a payment that reduces the |
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principal amount of the loan by at least five percent each time the |
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loan is refinanced. If the consumer does not make the required |
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payment, the loan may be refinanced, except that the credit access |
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business must compute its fees as if the consumer has made the |
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required payment each time the loan is refinanced. Accrued credit |
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access business fees may not be added to the unpaid loan amount. |
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(d) If the consumer does not make the payment required by |
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Subsection (c) and the lender chooses not to refinance the motor |
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vehicle title loan, the loan becomes due and payable under the |
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loan's original terms. |
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(e) An extension of consumer credit that is payable in |
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installments must be payable on a fully amortizing, declining |
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principal balance basis, with substantially equal payments to be |
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made as agreed to by the parties to the loan. If credit access |
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business fees are precomputed and the loan is prepaid in full, the |
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business must refund any unearned fees to the consumer. |
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SECTION 3. The changes in law made by this Act apply only to |
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an extension of consumer credit made on or after the effective date |
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of this Act. An extension of consumer credit made before the |
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effective date of this Act is governed by the law in effect on the |
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date the extension of consumer credit was made, and the former law |
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is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2013. |