Bill Text: IA SSB1096 | 2019-2020 | 88th General Assembly | Introduced

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Bill Title: A bill for an act relating to permissible interest rates and charges for certain loans.

Spectrum: Committee Bill

Status: (N/A - Dead) 2019-02-11 - Subcommittee recommends passage. [SSB1096 Detail]

Download: Iowa-2019-SSB1096-Introduced.html

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Senate Study Bill 1096 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE
ON COMMERCE BILL BY
CHAIRPERSON CHAPMAN)
A BILL FOR
An Act relating to permissible interest rates and charges for
certain loans.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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S.F. _____
Section 1. Section 536.13, subsection 7, paragraph a, Code
2019, is amended to read as follows:
a. The superintendent may establish the maximum rate of
interest or charges as permitted under this chapter for those
loans with an unpaid principal balance of ten thirty thousand
dollars or less. For those loans with an unpaid principal
balance of over ten thirty thousand dollars, the maximum rate
of interest or charges which a licensee may charge shall be
the greater of the rate permitted by chapter 535 or the rate
authorized for supervised financial organizations by chapter
537 .
Sec. 2. Section 537.2501, subsection 1, Code 2019, is
amended by adding the following new paragraph:
NEW PARAGRAPH . l. For an interest-bearing consumer credit
transaction, a service charge in an amount not to exceed the
lesser of ten percent of the amount financed or thirty dollars.
Sec. 3. Section 537.2510, subsection 3, paragraph a, Code
2019, is amended to read as follows:
a. If the prepayment is in full, the creditor may collect
or retain a minimum charge not exceeding five dollars in a
transaction which had an amount financed of seventy-five
dollars or less, or not exceeding seven dollars and fifty cents
in a transaction which had an amount financed of more than
seventy-five dollars, if the minimum charge was contracted
for, and the finance charge earned at the time of prepayment
is less than the minimum charge contracted for. If, however,
a creditor has collected a service charge in association with
an interest-bearing consumer credit transaction pursuant to
section 537.2501, subsection 1, paragraph “l” , the creditor
shall not collect or retain a minimum charge upon prepayment
pursuant to this subsection.
Sec. 4. Section 537.2510, Code 2019, is amended by adding
the following new subsection:
NEW SUBSECTION . 9. This section does not apply to a service
charge collected pursuant to section 537.2501, subsection 1,
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S.F. _____
paragraph “l” .
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to permissible interest rates and charges
for certain loans.
Current law allows the superintendent of banking to
establish the maximum rate of interest or charges for regulated
loans subject to Code chapter 536 with unpaid principal
balances of $10,000 or less. The bill increases this amount to
$30,000. For loans with unpaid principal balances in excess
of $30,000 (formerly $10,000), the maximum interest rate or
charges a lender may charge remains the greater of the rate
permitted in Code chapter 535 or the rate authorized for
supervised financial organizations in Code chapter 537.
The bill authorizes a creditor to contract for and receive,
for an interest-bearing consumer credit transaction, a service
charge in an amount not to exceed the lesser of 10 percent
of the amount financed or $30. The bill provides that if a
creditor has received such a service charge, the creditor
shall not collect or retain a minimum charge upon prepayment
as authorized under Code section 537.2510. The bill specifies
that Code section 537.2510, relating to rebate upon prepayment,
does not apply to service charges collected pursuant to the
bill.
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