H.F. 2375 Section 1. Section 536.13, subsection 7, paragraph a, Code 1 2018, is amended to read as follows: 2 a. The superintendent may establish the maximum rate of 3 interest or charges as permitted under this chapter for those 4 loans with an unpaid principal balance of ten thirty thousand 5 dollars or less. For those loans with an unpaid principal 6 balance of over ten thirty thousand dollars, the maximum rate 7 of interest or charges which a licensee may charge shall be 8 the greater of the rate permitted by chapter 535 or the rate 9 authorized for supervised financial organizations by chapter 10 537 . 11 Sec. 2. Section 537.2401, subsection 1, Code 2018, is 12 amended to read as follows: 13 1. Except as provided with respect to a finance charge for 14 loans pursuant to open-end credit under section 537.2402 and 15 loans secured by a certificate of title of a motor vehicle 16 under section 537.2403 , a lender may contract for and receive 17 a finance charge not exceeding the maximum charge permitted 18 by the laws of this state or of the United States for similar 19 lenders, and, in addition, with respect to a consumer loan, 20 a supervised financial organization or a mortgage lender may 21 contract for and receive a finance charge, calculated according 22 to the actuarial method, not exceeding the sum of a service 23 charge, collected in advance and equal to the lesser of two 24 percent of the amount financed or one hundred twenty dollars, 25 and twenty-one percent per year on the unpaid balance of the 26 amount financed. Except as provided in section 537.2403 , this 27 subsection does not prohibit a lender from contracting for and 28 receiving a finance charge exceeding the sum of the authorized 29 service charge and twenty-one percent per year on the unpaid 30 balance of the amount financed on consumer loans if authorized 31 by other provisions of the law. 32 Sec. 3. Section 537.2403, subsection 1, Code 2018, is 33 amended to read as follows: 34 1. A lender shall not contract for or receive a finance 35 -1- LSB 5930HV (2) 87 gh/rn 1/ 4

H.F. 2375 charge exceeding twenty-one percent per year on the unpaid 1 balance of the amount financed for For a loan of money secured 2 by a certificate of title to a motor vehicle used for personal, 3 family, or household purpose except as authorized under chapter 4 536 or 536A , a lender shall not contract for or receive a 5 finance charge exceeding the sum of a service charge, collected 6 in advance and equal to the lesser of two percent of the amount 7 financed or one hundred twenty dollars, and twenty-one percent 8 per year on the unpaid balance of the amount financed . A 9 consumer who is charged a finance charge in excess of the 10 limitation in this section may seek any remedies available 11 pursuant to this chapter for an excess charge. 12 Sec. 4. Section 537.2501, subsection 1, Code 2018, is 13 amended by adding the following new paragraph: 14 NEW PARAGRAPH . l. For an interest-bearing consumer credit 15 transaction, a service charge in an amount not to exceed the 16 lesser of ten percent of the amount financed or thirty dollars. 17 Sec. 5. Section 537.2510, subsection 3, paragraph a, Code 18 2018, is amended to read as follows: 19 a. If the prepayment is in full, the creditor may collect 20 or retain a minimum charge not exceeding five dollars in a 21 transaction which had an amount financed of seventy-five 22 dollars or less, or not exceeding seven dollars and fifty cents 23 in a transaction which had an amount financed of more than 24 seventy-five dollars, if the minimum charge was contracted 25 for, and the finance charge earned at the time of prepayment 26 is less than the minimum charge contracted for. If, however, 27 a creditor has collected a service charge in association with 28 an interest-bearing consumer credit transaction pursuant to 29 section 537.2501, subsection 1, paragraph “l” , the creditor 30 shall not collect or retain a minimum charge upon prepayment 31 pursuant to this subsection. 32 Sec. 6. Section 537.2510, Code 2018, is amended by adding 33 the following new subsection: 34 NEW SUBSECTION . 9. This section does not apply to a service 35 -2- LSB 5930HV (2) 87 gh/rn 2/ 4

H.F. 2375 charge collected pursuant to section 537.2501, subsection 1, 1 paragraph “l” . 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill relates to permissible interest rates and charges 6 for certain loans. 7 Current law allows the superintendent of banking to 8 establish the maximum rate of interest or charges for regulated 9 loans subject to Code chapter 536 with unpaid principal 10 balances of $10,000 or less. The bill increases this amount to 11 $30,000. For loans with unpaid principal balances in excess 12 of $30,000 (formerly $10,000), the maximum interest rate or 13 charges a lender may charge remains the greater of the rate 14 permitted in Code chapter 535 or the rate authorized for 15 supervised financial organizations in Code chapter 537. 16 Current law allows a supervised financial organization or 17 mortgage lender to contract for and receive a finance charge 18 not exceeding 21 percent per year on the unpaid balance of the 19 amount financed for a consumer loan subject to Code chapter 537 20 that is not pursuant to open-end credit. The bill provides 21 that such finance charge may also include a service charge, 22 collected in advance and equal to the lesser of 2 percent of 23 the amount financed or $120, in addition to 21 percent per 24 year on the unpaid balance of the consumer loan. A lender may 25 contract for and receive a finance charge in excess of this 26 amount if authorized by other provisions of the law. Under 27 current law, the maximum finance charge amount for a consumer 28 loan as provided in the bill also serves as the maximum amount 29 for interest rates on certain consumer loans made by state 30 credit unions (Code section 533.316), the maximum finance 31 charge amount applicable to certain supervised loans (Code 32 section 537.2308), and the maximum finance charge applicable 33 to certain consumer credit transactions on refinancing (Code 34 section 537.2504) and consolidation (Code section 537.2505). 35 -3- LSB 5930HV (2) 87 gh/rn 3/ 4

H.F. 2375 Additionally, current law allows a lender to contract for 1 and receive a finance charge not exceeding 21 percent per 2 year on the unpaid balance of the amount financed for a loan 3 secured by a certificate of title to certain motor vehicles. 4 The bill provides that such finance charge may also include a 5 service charge, collected in advance and equal to the lesser 6 of 2 percent of the amount financed or $120, in addition to 21 7 percent per year on the unpaid balance of the consumer loan. 8 The bill authorizes a creditor to contract for and receive, 9 for an interest-bearing consumer credit transaction, a service 10 charge in an amount not to exceed the lesser of 10 percent 11 of the amount financed or $30. The bill provides that if a 12 creditor has received such a service charge, the creditor 13 shall not collect or retain a minimum charge upon prepayment 14 as authorized under Code section 537.2510. The bill specifies 15 that Code section 537.2510, relating to rebate upon prepayment, 16 does not apply to service charges collected pursuant to the 17 bill. 18 -4- LSB 5930HV (2) 87 gh/rn 4/ 4