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                                                                  H.B. No. 1088




AN ACT

relating to an automobile club membership offered in connection 
with a loan.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter C, Chapter 303, Finance Code, is 
amended by adding Section 303.203 to read as follows:
	Sec. 303.203.  AUTOMOBILE CLUB MEMBERSHIP OFFERED IN 
CONNECTION WITH A LOAN.  (a)  A lender may, at the time or after a 
loan is made, offer to sell to the borrower and finance in the loan 
contract a charge for an automobile club membership.
	(b)  The lender may not require the purchase of the 
membership authorized under Subsection (a) as a condition for 
approval of the loan.
	(c)  The borrower shall provide the lender with written 
acknowledgment of the borrower's intent to purchase the membership.
	(d)  The amount charged for a membership as authorized by 
Subsection (a) must be reasonable.
	SECTION 2.  Subchapter J, Chapter 342, Finance Code, is 
amended by adding Section 342.457 to read as follows:
	Sec. 342.457.  AUTOMOBILE CLUB MEMBERSHIP OFFERED IN 
CONNECTION WITH A LOAN.  (a)  An authorized lender may, at the time 
or after a loan under Subchapter E is made, offer to sell to the 
borrower and finance in the loan contract a charge for an automobile 
club membership.
	(b)  The lender may not require the purchase of the 
membership authorized under Subsection (a) as a condition for 
approval of the loan.
	(c)  The borrower shall provide the lender with written 
acknowledgment of the borrower's intent to purchase the membership.
	(d)  The lender shall give the borrower written notice at the 
time the loan is made that the borrower:
		(1)  is not required to purchase the membership as a 
condition for approval of the loan; and
		(2)  is entitled to cancel the transaction and receive 
a full refund of the purchase price of the membership before the 
31st day after the date the loan is made.
	(e)  The commissioner shall:                                            
		(1)  adopt a rule providing for disclosure in Spanish 
of the information required by Subsection (d); and
		(2)  establish a form for the disclosure of the 
information required by Subsection (d) that conforms to the plain 
language and readability requirements applicable to loan contracts 
under Section 341.502.
	(f)  The amount charged for a membership as authorized by 
Subsection (a) must be reasonable.
	SECTION 3.  The change in law made by this Act applies only 
to a loan contract made on or after the effective date of this Act.  
A loan contract made before the effective date of this Act is 
governed by the law in effect when the loan contract was made, and 
the former law is continued in effect for that purpose.
	SECTION 4.  This Act takes effect September 1, 2005.                           



______________________________                ______________________________
 
   President of the Senate                               Speaker of the House      

	I certify that H.B. No. 1088 was passed by the House on April 
19, 2005, by a non-record vote.

                                                  ______________________________
                                                     Chief Clerk of the House   

	I certify that H.B. No. 1088 was passed by the Senate on May 
17, 2005, by the following vote:  Yeas 31, Nays 0.

                                                  ______________________________
                                                     Secretary of the Senate    



APPROVED:  _____________________                                            
 
                   Date                                                      




 
          _____________________                                          
 
                 Governor