House File 87 - Introduced HOUSE FILE 87 BY WESSEL-KROESCHELL A BILL FOR An Act establishing maximum interest rates to be charged by 1 pawnbrokers on pawnbroking transactions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1042YH (3) 87 gh/rn/nh

H.F. 87 Section 1. Section 535.2, subsection 1, unnumbered 1 paragraph 1, Code 2017, is amended to read as follows: 2 Except as provided in subsection subsections 2 and 8 , the 3 rate of interest shall be five cents on the hundred by the 4 year in the following cases, unless the parties shall agree in 5 writing for the payment of interest at a rate not exceeding the 6 rate permitted by subsection 3 : 7 Sec. 2. Section 535.2, Code 2017, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 8. a. Notwithstanding any other provision 10 of this section, the maximum rate of interest charged by a 11 pawnbroker on a pawnbroking transaction shall not be more 12 than ten percent per month on a pawnbroking transaction of 13 twenty-five dollars or less, seven percent per month on a 14 pawnbroking transaction of more than twenty-five dollars and 15 less than one hundred dollars, or five percent per month on a 16 pawnbroking transaction of one hundred dollars or more. 17 b. For the purposes of this subsection: 18 (1) “Pawnbroker” means any person authorized by law to 19 engage in the business of conducting pawnbroking transactions. 20 “Pawnbroker” does not include any bank regulated by this state, 21 the comptroller of the currency of the United States, the 22 federal deposit insurance corporation, the board of governors 23 of the federal reserve system, or any other federal or state 24 authority or their affiliates; any bank or savings association 25 whose deposits or accounts are eligible for insurance by 26 the federal deposit insurance corporation or any successor 27 thereto; any state or federally chartered credit union; or any 28 industrial loan or thrift company or regulated lender subject 29 to licensing and regulation by the department of commerce. 30 (2) “Pawnbroking transaction” means any loan on the security 31 of pledged goods or any purchase of pledged goods on the 32 condition that the pledged goods are left with the pawnbroker 33 and may be redeemed or repurchased by the seller for a fixed 34 price within a fixed period of time. 35 -1- LSB 1042YH (3) 87 gh/rn/nh 1/ 3

H.F. 87 (3) “Person” means an individual, partnership, corporation, 1 limited liability company, joint venture, trust, association, 2 or any other legal entity, however organized. 3 (4) “Pledged goods” means tangible personal property 4 other than securities, bank drafts, or printed evidence 5 of indebtedness, that are purchased by, deposited with, 6 or otherwise actually delivered into the possession of a 7 pawnbroker in connection with a pawnbroking transaction. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill establishes maximum interest rates that may be 12 charged by pawnbrokers on pawnbroking transactions. 13 Currently, Code section 535.2 establishes the maximum lawful 14 interest rates chargeable on loans. The bill provides an 15 exception to this maximum interest rate regarding the maximum 16 interest rates that pawnbrokers can charge on pawnbroking 17 transactions. The bill provides that the maximum interest rate 18 for pawnbroking transactions of $25 or less is 10 percent per 19 month, 7 percent per month for pawnbroking transactions over 20 $25 but less than $100, and 5 percent per month for pawnbroking 21 transactions of $100 or more. 22 Pursuant to Code section 535.5, a person charged a higher 23 rate of interest than these specified rates may obtain a court 24 judgment to pay back only the principal amount of the debt 25 without interest or costs. In addition, a pawnbroker found in 26 violation forfeits 8 percent of the unpaid principal debt at 27 the time of judgment. 28 The bill provides several definitions relating to interest 29 rates applicable to pawnbroking transactions. The bill defines 30 a “pawnbroker” to mean any person who engages in the business 31 of conducting pawnbroking transactions. The bill specifies a 32 list of entities that are not included in the definition of 33 “pawnbroker”. The bill defines a “pawnbroking transaction” to 34 mean any loan on the security of pledged goods or any purchase 35 -2- LSB 1042YH (3) 87 gh/rn/nh 2/ 3

H.F. 87 of pledged goods on the condition that the pledged goods are 1 left with the pawnbroker and may be redeemed or repurchased by 2 the seller for a fixed price within a fixed period of time. 3 The bill defines “pledged goods” to mean tangible personal 4 property other than securities, bank drafts, or printed 5 evidence of indebtedness, that are purchased by, deposited 6 with, or otherwise actually delivered into the possession of a 7 pawnbroker in connection with a pawnbroking transaction. 8 -3- LSB 1042YH (3) 87 gh/rn/nh 3/ 3