Senate Study Bill 1118 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON ANDERSON) A BILL FOR An Act relating to certain charges for consumer credit 1 transactions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2322XC (3) 87 gh/rn

S.F. _____ Section 1. Section 537.2501, subsection 1, Code 2017, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . k. Credit reporting charges and charges for 3 a dishonored consumer credit transaction payment as provided in 4 section 554.3512. 5 Sec. 2. Section 537.2502, subsection 1, paragraphs a and b, 6 Code 2017, are amended to read as follows: 7 a. For a precomputed transaction, an amount not exceeding 8 the greater of either of the following: 9 (1) Five Ten percent of the unpaid amount of the 10 installment, or a maximum of twenty thirty dollars. 11 (2) The deferral charge that would be permitted to defer 12 the unpaid amount of the installment for the period that it is 13 delinquent. 14 b. For an interest-bearing transaction, an amount not 15 exceeding five ten percent of the unpaid amount of the 16 installment, or a maximum of fifteen thirty dollars. 17 Sec. 3. Section 537.2502, subsection 4, Code 2017, is 18 amended to read as follows: 19 4. With respect to open-end credit, the parties may contract 20 for a delinquency charge on any payment not paid in full when 21 due, as originally scheduled or as deferred, in an amount up to 22 fifteen thirty dollars. 23 Sec. 4. Section 537.2502, Code 2017, is amended by adding 24 the following new subsection: 25 NEW SUBSECTION . 7. With respect to an interest-bearing 26 consumer credit transaction, the parties may contract for 27 a post-maturity interest rate at a rate not exceeding that 28 permitted for a finance charge under section 535.10, 537.2401, 29 537.2402, or 537.2403. 30 Sec. 5. Section 537.2510, subsection 3, unnumbered 31 paragraph 1, Code 2017, is amended to read as follows: 32 Upon prepayment , but not otherwise, of a consumer credit 33 transaction whether or not precomputed, of a precomputed 34 consumer credit transaction other than a consumer lease, a 35 -1- LSB 2322XC (3) 87 gh/rn 1/ 3

S.F. _____ consumer rental purchase agreement, or a transaction pursuant 1 to open-end credit: 2 Sec. 6. Section 537.2510, Code 2017, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 8. This section does not apply to an 5 interest-bearing consumer credit transaction. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill modifies provisions relating to certain charges 10 for consumer credit transactions. 11 Code section 537.2501 sets forth the charges that a creditor 12 may receive pursuant to a consumer credit transaction in 13 addition to a finance charge. The bill provides that in 14 addition to the charges provided in current Code section 15 537.2501, a creditor may receive credit reporting charges and 16 charges for dishonored checks as provided in Code section 17 554.3512. 18 Current Code section 537.2502 allows the parties in certain 19 consumer credit transactions to contract for delinquency 20 charges. For a precomputed consumer credit transaction, the 21 maximum delinquency charge is increased from the greater of 5 22 percent of the unpaid installment or $20, to the greater of 23 10 percent of the unpaid installment or $30, or the deferral 24 charge amount. For an interest-bearing consumer credit 25 transaction, the maximum delinquency charge is increased from 5 26 percent of the unpaid installment or $15, to 10 percent of the 27 unpaid installment or $30. For an open-end credit arrangement, 28 the maximum delinquency charge is increased from $15 to $30. 29 The bill also provides that with respect to an interest-bearing 30 transaction, the parties may contract for a post-maturity 31 interest rate at a rate not exceeding a finance charge that 32 is permitted under Code section 535.10 (home equity line of 33 credit), 537.2401 (consumer loans not pursuant to open-end 34 credit), 537.2402 (consumer loans pursuant to open-end credit), 35 -2- LSB 2322XC (3) 87 gh/rn 2/ 3

S.F. _____ or 537.2403 (consumer loans secured by a motor vehicle). 1 Current Code section 537.2510 requires creditors to rebate 2 certain amounts to consumers upon the prepayment of precomputed 3 consumer credit transactions. The bill limits the charges 4 allowed in Code section 537.2510(3) to be applicable only upon 5 the prepayment of precomputed consumer credit transactions. 6 The bill specifically provides that Code section 537.2510 does 7 not apply to interest-bearing consumer credit transactions. 8 -3- LSB 2322XC (3) 87 gh/rn 3/ 3