This bill was authored by Senator Carona, and is “relating to authorized acquisition and delingquency charges for certain consumer loans.” The term “certain consumer loans” is referring to what is commonly referred to as “micro loans.” The loans referenced in this bill are funded under Texas Finance Code Chapter 342, or the “regulated lender license.” The regulated lender loans are different from CAB loans in that they are funded by the licensee, not a third party lender for whom the CAB is a special limited agent. As well, the regulated lender loans have historically been “term loans” that go beyond the 180 constraint of CAB transactions into terms of 12,24,36 months. These term loans are either 24% or 80% depending on whether they are Subchapter E, or Subchapter F. Now, it looks like something new is being addressed in this bill and loan amounts that are less than $30, $30 or more but not over $100, and then “cash advances of more than $100.”

The bill says that the following charges are authorized on the loan types below:

“Acquisition charges:”
$29 or less, an acquisition charge that is not more than $1 for each $5 of advance (aka 20% of loan amount)
$30 or more, an acquisition charge that is not more than the amount equal to 1/10th of the amount of the advance (aka 10% of loan amount)
$100 and up, acquisition charge of not more than 10% of the advance.

Then, there are monthly “Installment account handling charges:”
$35 or less, $3 per month installment account handling charge, flat fee
$35 to $70 cash advances, $3.50 per month installment account handling charge, flat fee
$70 and up, $4 per month installment account handling charge, flat fee
$100 and up, not more than $4 per month for each $100 of cash advance (aka 4% per month)

Default charges are addressed as well:
Loans of $100 or more, instead of additional interest the contract may provide for a delinquency charge after 10 days, on any installment payment within the term of the loan. Cannot exceed “the greater of $20, or 5 cents for each $1 of the late payment.

Later in the bill after most of the items in Chapter 342 are covered, there is another provision where “instead of charges authorized under Chapter 342.252 and 342.201, it addresses loans that could be instead funded under Chapter 341, in the amount of $100-$200. There would be a 10% acquisition charge and a monthly installment account handling charge of no more than $4 per month for each $100 of cash advance. Would go into effect 9-1-2013.

Click here for a PDF of SB 823! SB.823