House of Representatives

SB 1290

loan origination fees

Sponsors: Senator Cirillo

Dp	Committee on Financial Institutions and Insurance
DP	Caucus and COW
X	As Transmitted to the Governor

SB 1290 authorizes a consumer lender to charge an origination fee on unsecured loans and revolving loans. The fee shall not exceed five per cent of the loan amount or $75, whichever is less.

History

Consumer lenders are financial institutions that lend money to borrowers for non-commercial purposes. Consumer lender loans include consumer loans, consumer revolving loans and home equity loans. Consumer loans are non-commercial loans for a set amount not to exceed $10,000 and consumer revolving loans are non-commercial loans that establish a line of credit not to exceed $10,000. Pursuant to A.R.S. 6-601 et seq., consumer lenders are subject to either a 36 per cent interest or 24 per cent interest cap. The interest rate is dependent on the type and amount of the loan.

Provisions

· Authorizes a consumer loan company to charge an origination fee for unsecured and revolving loans up to five percent for the amount loaned, but the fee shall not exceed $75.

· Prohibits a consumer loan company from charging an origination fee for the refinancing or renegotiating of an unsecured loan that occurs within one year of the original loan.

· Requires consumer lenders to report annually the number of unsecured loans it made in the prior two years under $1,000 to the Superintendent of the State Banking Department. The reporting requirement shall take effect on October 1, 2003.

---------- DOCUMENT FOOTER ---------

44th Legislature

Second Regular Session 2 June 8, 2001

---------- DOCUMENT FOOTER ---------