House Bill 886

by The CAB Man Texas on March 5, 2013

This bill, authored by Anchia and is “relating to restrictions in connection with motor vehicle title loans that a Credit Access Business obtains for a consumer or assists a consumer in obtaining.” The bill starts with a recommended limit on auto title loan amounts. CAB’s and Third Party Lenders would be required to limit the amount of a loan to “70% of retail value” of the vehicle. This seems very acceptable, many CABs are operating off more strict criteria right now. And, if a single payment auto title loan is re-financed, there must be an additional payment of at least 5% of the principal, in addition to the interest & fees due. The requirement of a pay down towards principal addressing the “cycle of debt” issue. The bill goes on to say that even if the customer does not make the required pay down, the CAB fees must adjust down as if the customer made the 5% pay down. If the customer does default, the note can still be called due if operator/third party lender desire. Multi-payment loans would need to be fully amortizing, with declining principal, with close to equal payments. If early payoff occurs, pre-computed CAB fees would have to be refunded as un-earned. That’s an important item to make note of, loan terms and CAB fees would need to be carefully considered when CABs are adapting their model to new rules and regulations. Would go into effect 9-1-2013.

Click here for a PDF version of HB 886! HB.886

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