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Senate Study Bill 1096 - IntroducedA Bill ForAn Act 1relating to permissible interest rates and charges for
2certain loans.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 536.13, subsection 7, paragraph a, Code
22019, is amended to read as follows:
3a. The superintendent may establish the maximum rate of
4interest or charges as permitted under this chapter for those
5loans with an unpaid principal balance of ten thirty thousand
6dollars or less. For those loans with an unpaid principal
7balance of over ten thirty thousand dollars, the maximum rate
8of interest or charges which a licensee may charge shall be
9the greater of the rate permitted by chapter 535 or the rate
10authorized for supervised financial organizations by chapter
11537.
12 Sec. 2. Section 537.2501, subsection 1, Code 2019, is
13amended by adding the following new paragraph:
14 NEW PARAGRAPH. l. For an interest-bearing consumer credit
15transaction, a service charge in an amount not to exceed the
16lesser of ten percent of the amount financed or thirty dollars.
17 Sec. 3. Section 537.2510, subsection 3, paragraph a, Code
182019, is amended to read as follows:
19a. If the prepayment is in full, the creditor may collect
20or retain a minimum charge not exceeding five dollars in a
21transaction which had an amount financed of seventy-five
22dollars or less, or not exceeding seven dollars and fifty cents
23in a transaction which had an amount financed of more than
24seventy-five dollars, if the minimum charge was contracted
25for, and the finance charge earned at the time of prepayment
26is less than the minimum charge contracted for. If, however,
27a creditor has collected a service charge in association with
28an interest-bearing consumer credit transaction pursuant to
29section 537.2501, subsection 1, paragraph “l”, the creditor
30shall not collect or retain a minimum charge upon prepayment
31pursuant to this subsection.
32 Sec. 4. Section 537.2510, Code 2019, is amended by adding
33the following new subsection:
34 NEW SUBSECTION. 9. This section does not apply to a service
35charge collected pursuant to section 537.2501, subsection 1,
-1-1paragraph “l”.
2EXPLANATION
3The inclusion of this explanation does not constitute agreement with
4the explanation’s substance by the members of the general assembly.
5This bill relates to permissible interest rates and charges
6for certain loans.
7Current law allows the superintendent of banking to
8establish the maximum rate of interest or charges for regulated
9loans subject to Code chapter 536 with unpaid principal
10balances of $10,000 or less. The bill increases this amount to
11$30,000. For loans with unpaid principal balances in excess
12of $30,000 (formerly $10,000), the maximum interest rate or
13charges a lender may charge remains the greater of the rate
14permitted in Code chapter 535 or the rate authorized for
15supervised financial organizations in Code chapter 537.
16The bill authorizes a creditor to contract for and receive,
17for an interest-bearing consumer credit transaction, a service
18charge in an amount not to exceed the lesser of 10 percent
19of the amount financed or $30. The bill provides that if a
20creditor has received such a service charge, the creditor
21shall not collect or retain a minimum charge upon prepayment
22as authorized under Code section 537.2510. The bill specifies
23that Code section 537.2510, relating to rebate upon prepayment,
24does not apply to service charges collected pursuant to the
25bill.
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2certain loans.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 536.13, subsection 7, paragraph a, Code
22019, is amended to read as follows:
3a. The superintendent may establish the maximum rate of
4interest or charges as permitted under this chapter for those
5loans with an unpaid principal balance of ten thirty thousand
6dollars or less. For those loans with an unpaid principal
7balance of over ten thirty thousand dollars, the maximum rate
8of interest or charges which a licensee may charge shall be
9the greater of the rate permitted by chapter 535 or the rate
10authorized for supervised financial organizations by chapter
11537.
12 Sec. 2. Section 537.2501, subsection 1, Code 2019, is
13amended by adding the following new paragraph:
14 NEW PARAGRAPH. l. For an interest-bearing consumer credit
15transaction, a service charge in an amount not to exceed the
16lesser of ten percent of the amount financed or thirty dollars.
17 Sec. 3. Section 537.2510, subsection 3, paragraph a, Code
182019, is amended to read as follows:
19a. If the prepayment is in full, the creditor may collect
20or retain a minimum charge not exceeding five dollars in a
21transaction which had an amount financed of seventy-five
22dollars or less, or not exceeding seven dollars and fifty cents
23in a transaction which had an amount financed of more than
24seventy-five dollars, if the minimum charge was contracted
25for, and the finance charge earned at the time of prepayment
26is less than the minimum charge contracted for. If, however,
27a creditor has collected a service charge in association with
28an interest-bearing consumer credit transaction pursuant to
29section 537.2501, subsection 1, paragraph “l”, the creditor
30shall not collect or retain a minimum charge upon prepayment
31pursuant to this subsection.
32 Sec. 4. Section 537.2510, Code 2019, is amended by adding
33the following new subsection:
34 NEW SUBSECTION. 9. This section does not apply to a service
35charge collected pursuant to section 537.2501, subsection 1,
-1-1paragraph “l”.
2EXPLANATION
3The inclusion of this explanation does not constitute agreement with
4the explanation’s substance by the members of the general assembly.
5This bill relates to permissible interest rates and charges
6for certain loans.
7Current law allows the superintendent of banking to
8establish the maximum rate of interest or charges for regulated
9loans subject to Code chapter 536 with unpaid principal
10balances of $10,000 or less. The bill increases this amount to
11$30,000. For loans with unpaid principal balances in excess
12of $30,000 (formerly $10,000), the maximum interest rate or
13charges a lender may charge remains the greater of the rate
14permitted in Code chapter 535 or the rate authorized for
15supervised financial organizations in Code chapter 537.
16The bill authorizes a creditor to contract for and receive,
17for an interest-bearing consumer credit transaction, a service
18charge in an amount not to exceed the lesser of 10 percent
19of the amount financed or $30. The bill provides that if a
20creditor has received such a service charge, the creditor
21shall not collect or retain a minimum charge upon prepayment
22as authorized under Code section 537.2510. The bill specifies
23that Code section 537.2510, relating to rebate upon prepayment,
24does not apply to service charges collected pursuant to the
25bill.
-2-gh/rn