bill capping payday-style loans at 36 percent a year

The text as introduced · 485 words

89R2482 MLH-D

By: Bucy
H.B. No. 476

A BILL TO BE ENTITLED

AN ACT

relating to the maximum permitted rate of interest, sum of fees, and

other amounts that may be charged in connection with deferred

presentment transactions; creating a criminal offense.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter M, Chapter 342, Finance Code, is

amended by adding Section 342.606 to read as follows:

Sec. 342.606. MAXIMUM INTEREST RATES. (a) Unless a lower

rate of interest is otherwise provided by law, the maximum rate or

amount of interest that may be contracted for, charged, or received

from a borrower is:

(1) for a deferred presentment transaction that

advances more than $300, 38.5 percent a year; and

(2) for a deferred presentment transaction that

advances not more than $300, 36 percent a year.

(b) A deferred presentment transaction entered into in

violation of this section is void and unenforceable.

(c) A lender commits an offense if the lender enters into a

deferred presentment transaction in violation of this section. An

offense under this section is a Class A misdemeanor.

SECTION 2. Subchapter G, Chapter 393, Finance Code, is

amended by adding Section 393.629 to read as follows:

Sec. 393.629. RESTRICTION ON CHARGES CHARGED IN CONNECTION

WITH DEFERRED PRESENTMENT TRANSACTIONS. (a) For purposes of this

section, the annual percentage rate of an extension of consumer

credit in the form of a deferred presentment transaction is

calculated including the total charges charged to the consumer in

connection with the extension of consumer credit, including

interest, lender charges, and any fees or any other valuable

consideration received by the credit access business or a

representative of the credit access business.

(b) The annual percentage rate of an extension of consumer

credit in the form of a deferred presentment transaction that a

credit access business obtains for a consumer or assists a consumer

in obtaining may not exceed:

(1) for a deferred presentment transaction that

advances more than $300, 38.5 percent; and

(2) for a deferred presentment transaction that

advances not more than $300, 36 percent.

(c) A deferred presentment transaction entered into in

violation of this section is void and unenforceable.

SECTION 3. Sections 342.606 and 393.629, Finance Code, as

added by this Act, apply only to a loan or extension of consumer

credit, as applicable, made on or after the effective date of this

Act. A loan or extension of consumer credit made before the

effective date of this Act is governed by the law in effect on the

date the loan or extension of consumer credit was made, and the

former law is continued in effect for that purpose. For purposes of

this section, a refinance of a loan or extension of consumer credit

is considered made on the date the loan or extension of consumer

credit being refinanced was made.

SECTION 4. This Act takes effect September 1, 2025.