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A BILL TO BE ENTITLED
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AN ACT
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relating to authorized charges and terms for certain consumer |
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loans. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 342.002, Finance Code, is amended by |
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adding Subsection (d) to read as follows: |
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(d) Interest under the scheduled installment earnings |
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method or true daily earnings method may not be compounded. |
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SECTION 2. The heading to Section 342.201, Finance Code, is |
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amended to read as follows: |
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Sec. 342.201. MAXIMUM INTEREST CHARGE AND ADMINISTRATIVE |
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FEE. |
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SECTION 3. Section 342.201, Finance Code, is amended by |
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amending Subsection (f) and adding Subsection (g) to read as |
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follows: |
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(f) A loan contract under this subchapter may provide for an |
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administrative fee in an amount not to exceed the lesser of five |
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percent of the total amount financed or $100 [$25 for a loan of more
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than $1,000 or $20 for a loan of $1,000 or less]. The |
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administrative fee is considered earned when the loan is made or |
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refinanced and is not subject to refund. An administrative fee is |
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not interest. A lender refinancing the loan may not contract for or |
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receive an administrative fee for the loan more than once in any |
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180-day period, except that if the loan has an interest charge |
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authorized by Subsection (e) the lender may not contract for or |
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receive the administrative fee more than once in any 365-day |
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period. One dollar of each administrative fee may be deposited with |
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the comptroller for use in carrying out the finance commission's |
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responsibilities under Section 11.3055. |
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(g) The finance commission by rule may prescribe a |
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reasonable amount of an administrative fee for a loan contract |
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under this subchapter that is greater than the amount authorized by |
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this section for the amount of the loan. |
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SECTION 4. Section 342.252, Finance Code, is amended to |
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read as follows: |
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Sec. 342.252. ALTERNATE CHARGES [INTEREST CHARGE]. |
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(a) Instead of the charges authorized by Section 342.201, a loan |
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contract may provide for: |
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(1) on a cash advance of less than $30, an acquisition |
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charge that is not more than $1 for each $5 of the cash advance; |
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(2) on a cash advance equal to or more than $30 but not |
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more than $100: |
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(A) an acquisition charge that is not more than |
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the amount equal to one-tenth of the amount of the cash advance; and |
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(B) an installment account handling charge that |
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is not more than: |
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(i) $3 a month if the cash advance is not |
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more than $35; |
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(ii) $3.50 a month if the cash advance is |
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more than $35 but not more than $70; or |
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(iii) $4 a month if the cash advance is more |
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than $70; or |
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(3) on a cash advance of more than $100: |
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(A) an acquisition charge that is not more than |
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10 percent of the amount of the cash advance [$10]; and |
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(B) an installment account handling charge that |
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is not more than the ratio of $4 a month for each $100 of cash |
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advance. |
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(b) For an acquisition charge authorized by this |
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subchapter, the finance commission by rule may prescribe a |
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reasonable amount for an acquisition charge that is greater than |
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the maximum amount authorized by the applicable section of this |
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subchapter for the amount of the cash advance. |
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(c) An acquisition charge under this subchapter is not |
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interest. |
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SECTION 5. Section 342.255, Finance Code, is amended to |
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read as follows: |
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Sec. 342.255. MAXIMUM LOAN TERM. The maximum scheduled |
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term of a loan made under this subchapter is: |
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(1) for a loan of $100 or less, the lesser of: |
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(A) one month for each multiple of $10 of cash |
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advance; or |
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(B) six months; and |
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(2) for a loan of more than $100, one month for each |
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multiple of $20 of cash advance. |
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SECTION 6. Section 342.257, Finance Code, is amended to |
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read as follows: |
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Sec. 342.257. DEFAULT CHARGE; DEFERMENT OF PAYMENT. The |
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provisions of Subchapter E relating to additional interest for |
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default and additional interest for the deferment of installments |
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apply to a loan made under this subchapter. Provided, that on a |
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loan contract in which the cash advance is $100 or more, instead of |
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additional interest for default under Subchapter E, the contract |
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may provide for a delinquency charge if any part of an installment |
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remains unpaid after the 10th day after the date on which the |
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installment is due, including Sundays and holidays. The |
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delinquency charge on a loan with a cash advance of $100 or more may |
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not exceed the greater of $20 [$10] or five cents for each $1 of the |
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delinquent installment. |
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SECTION 7. Subsection (a), Section 342.259, Finance Code, |
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is amended to read as follows: |
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(a) Instead of the charges authorized by Sections 342.201 |
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and 342.252, a loan made under this subchapter with a maximum cash |
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advance computed under Subchapter C, Chapter 341, using a reference |
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base amount that is more than $100 but not more than $200, may |
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provide for: |
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(1) an acquisition charge that is not more than 10 |
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percent of the amount of the cash advance [$10]; and |
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(2) an installment account handling charge that is not |
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more than the ratio of $4 a month for each $100 of cash advance. |
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SECTION 8. Subsection (a), Section 342.352, Finance Code, |
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is amended to read as follows: |
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(a) This section applies to a loan contract: |
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(1) that includes precomputed interest and to which |
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Section 342.351 does not apply; |
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(2) that includes interest contracted for under |
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Section 342.201 or 342.260; or |
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(3) that has a term of more than 60 months. |
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SECTION 9. Subchapter F, Chapter 342, Finance Code, is |
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amended by adding Section 342.260 to read as follows: |
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Sec. 342.260. ALTERNATE INTEREST CHARGE COMPUTATION |
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METHODS. (a) A loan contract under this subchapter may provide |
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for an interest charge computed using the true daily earnings |
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method or the scheduled installment earnings method that does not |
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exceed the equivalent rate or effective return of the installment |
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account handling charge for the original scheduled term of the |
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loan. |
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(b) The principal balance of a loan contract authorized by |
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this section may not include the acquisition charge, installment |
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account handling charge, default charges, or deferment charges or |
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the return check fees authorized by Section 3.506, Business & |
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Commerce Code. |
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(c) Interest may accrue on the principal balance from time |
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to time unpaid at the rate provided for by the contract until the |
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date of payment in full or demand for payment in full. |
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(d) A payment on a loan contract authorized by this section |
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shall be applied to the borrower's account in the following order |
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or, at the lender's option, under another method of applying a |
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payment that is more favorable to the borrower: |
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(1) the straight line allocation of the acquisition |
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charge using the original scheduled term of the loan based on the |
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proportional scheduled payment that was paid or scheduled to be |
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paid; |
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(2) default charges authorized by Section 342.257; |
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(3) return check fees authorized by Section 3.506, |
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Business & Commerce Code; |
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(4) any other charges authorized by this subchapter; |
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(5) accrued interest authorized by this section; and |
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(6) principal. |
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SECTION 10. The changes in law made by this Act apply 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. |
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SECTION 11. This Act takes effect September 1, 2013. |
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