Bill Text: IA SF2331 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to permissible interest rates and charges for certain loans. (Formerly SSB 3158.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2018-03-15 - Placed on calendar under unfinished business. S.J. 692. [SF2331 Detail]

Download: Iowa-2017-SF2331-Introduced.html

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Senate File 2331 - Introduced




                                 SENATE FILE       
                                 BY  COMMITTEE ON COMMERCE

                                 (SUCCESSOR TO SSB
                                     3158)

                                      A BILL FOR

  1 An Act relating to permissible interest rates and charges for
  2    certain loans.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 536.13, subsection 7, paragraph a, Code
  1  2 2018, is amended to read as follows:
  1  3    a.  The superintendent may establish the maximum rate of
  1  4 interest or charges as permitted under this chapter for those
  1  5 loans with an unpaid principal balance of ten thirty thousand
  1  6 dollars or less. For those loans with an unpaid principal
  1  7 balance of over ten thirty thousand dollars, the maximum rate
  1  8 of interest or charges which a licensee may charge shall be
  1  9 the greater of the rate permitted by chapter 535 or the rate
  1 10 authorized for supervised financial organizations by chapter
  1 11 537.
  1 12    Sec. 2.  Section 537.2501, subsection 1, Code 2018, is
  1 13 amended by adding the following new paragraph:
  1 14    NEW PARAGRAPH.  l.  For an interest=bearing consumer credit
  1 15 transaction, a service charge in an amount not to exceed the
  1 16 lesser of ten percent of the amount financed or thirty dollars.
  1 17    Sec. 3.  Section 537.2510, subsection 3, paragraph a, Code
  1 18 2018, is amended to read as follows:
  1 19    a.  If the prepayment is in full, the creditor may collect
  1 20 or retain a minimum charge not exceeding five dollars in a
  1 21 transaction which had an amount financed of seventy=five
  1 22 dollars or less, or not exceeding seven dollars and fifty cents
  1 23 in a transaction which had an amount financed of more than
  1 24 seventy=five dollars, if the minimum charge was contracted
  1 25 for, and the finance charge earned at the time of prepayment
  1 26 is less than the minimum charge contracted for.  If, however,
  1 27 a creditor has collected a service charge in association with
  1 28 an interest=bearing consumer credit transaction pursuant to
  1 29 section 537.2501, subsection 1, paragraph "l", the creditor
  1 30 shall not collect or retain a minimum charge upon prepayment
  1 31 pursuant to this subsection.
  1 32    Sec. 4.  Section 537.2510, Code 2018, is amended by adding
  1 33 the following new subsection:
  1 34    NEW SUBSECTION.  9.  This section does not apply to a service
  1 35 charge collected pursuant to section 537.2501, subsection 1,
  2  1 paragraph "l".
  2  2                           EXPLANATION
  2  3 The inclusion of this explanation does not constitute agreement with
  2  4 the explanation's substance by the members of the general assembly.
  2  5    This bill relates to permissible interest rates and charges
  2  6 for certain loans.
  2  7    Current law allows the superintendent of banking to
  2  8 establish the maximum rate of interest or charges for regulated
  2  9 loans subject to Code chapter 536 with unpaid principal
  2 10 balances of $10,000 or less. The bill increases this amount to
  2 11 $30,000. For loans with unpaid principal balances in excess
  2 12 of $30,000 (formerly $10,000), the maximum interest rate or
  2 13 charges a lender may charge remains the greater of the rate
  2 14 permitted in Code chapter 535 or the rate authorized for
  2 15 supervised financial organizations in Code chapter 537.
  2 16    The bill authorizes a creditor to contract for and receive,
  2 17 for an interest=bearing consumer credit transaction, a service
  2 18 charge in an amount not to exceed the lesser of 10 percent
  2 19 of the amount financed or $30. The bill provides that if a
  2 20 creditor has received such a service charge, the creditor
  2 21 shall not collect or retain a minimum charge upon prepayment
  2 22 as authorized under Code section 537.2510. The bill specifies
  2 23 that Code section 537.2510, relating to rebate upon prepayment,
  2 24 does not apply to service charges collected pursuant to the
  2 25 bill.
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