S.B. No. 1251
 
 
 
 
AN ACT
  relating to authorized charges and terms for certain consumer
  loans.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 342.002, Finance Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Interest under the scheduled installment earnings
  method or true daily earnings method may not be compounded.
         SECTION 2.  The heading to Section 342.201, Finance Code, is
  amended to read as follows:
         Sec. 342.201.  MAXIMUM INTEREST CHARGE AND ADMINISTRATIVE
  FEE.
         SECTION 3.  Section 342.201, Finance Code, is amended by
  amending Subsection (f) and adding Subsection (g) to read as
  follows:
         (f)  A loan contract under this subchapter may provide for an
  administrative fee in an amount not to exceed $25 for a loan of more
  than $1,000 or $20 for a loan of $1,000 or less.  The administrative
  fee is considered earned when the loan is made or refinanced and is
  not subject to refund. An administrative fee is not interest. A
  lender refinancing the loan may not contract for or receive an
  administrative fee for the loan more than once in any 180-day
  period, except that if the loan has an interest charge authorized by
  Subsection (e) the lender may not contract for or receive the
  administrative fee more than once in any 365-day period.  One dollar
  of each administrative fee may be deposited with the comptroller
  for use in carrying out the finance commission's responsibilities
  under Section 11.3055.
         (g)  The finance commission by rule may prescribe a
  reasonable maximum amount of an administrative fee for a loan
  contract under this subchapter that is greater than the maximum
  amount authorized by this section for the amount of the loan.
         SECTION 4.  Section 342.252, Finance Code, is amended to
  read as follows:
         Sec. 342.252.  ALTERNATE CHARGES [INTEREST CHARGE].
  (a)  Instead of the charges authorized by Section 342.201, a loan
  contract may provide for:
               (1)  on a cash advance of less than $30, an acquisition
  charge that is not more than $1 for each $5 of the cash advance;
               (2)  on a cash advance equal to or more than $30 but not
  more than $100:
                     (A)  an acquisition charge that is not more than
  the amount equal to one-tenth of the amount of the cash advance; and
                     (B)  an installment account handling charge that
  is not more than:
                           (i)  $3 a month if the cash advance is not
  more than $35;
                           (ii)  $3.50 a month if the cash advance is
  more than $35 but not more than $70; or
                           (iii)  $4 a month if the cash advance is more
  than $70; or
               (3)  on a cash advance of more than $100:
                     (A)  an acquisition charge that is not more than
  $10; and
                     (B)  an installment account handling charge that
  is not more than the ratio of $4 a month for each $100 of cash
  advance.
         (b)  For an acquisition charge authorized by this
  subchapter, the finance commission by rule may prescribe a
  reasonable maximum amount for an acquisition charge that is greater
  than the maximum amount authorized by the applicable section of
  this subchapter for the amount of the cash advance.
         (c)  An acquisition charge under this subchapter is not
  interest.
         SECTION 5.  Section 342.255, Finance Code, is amended to
  read as follows:
         Sec. 342.255.  MAXIMUM LOAN TERM. The maximum scheduled
  term of a loan made under this subchapter is:
               (1)  for a loan of $100 or less, the lesser of:
                     (A)  one month for each multiple of $10 of cash
  advance; or
                     (B)  six months; and
               (2)  for a loan of more than $100, one month for each
  multiple of $20 of cash advance.
         SECTION 6.  Subsection (a), Section 342.352, Finance Code,
  is amended to read as follows:
         (a)  This section applies to a loan contract:
               (1)  that includes precomputed interest and to which
  Section 342.351 does not apply;
               (2)  that includes interest contracted for under
  Section 342.201 or 342.260; or
               (3)  that has a term of more than 60 months.
         SECTION 7.  Subchapter F, Chapter 342, Finance Code, is
  amended by adding Section 342.260 to read as follows:
         Sec. 342.260.  ALTERNATE INTEREST CHARGE COMPUTATION
  METHODS. (a)  A loan contract under this subchapter may provide
  for an interest charge computed using the true daily earnings
  method or the scheduled installment earnings method that does not
  exceed the equivalent rate or effective return of the installment
  account handling charge for the original scheduled term of the
  loan.
         (b)  The principal balance of a loan contract authorized by
  this section may not include the acquisition charge, installment
  account handling charge, default charges, or deferment charges or
  the return check fees authorized by Section 3.506, Business &
  Commerce Code.
         (c)  Interest may accrue on the principal balance from time
  to time unpaid at the rate provided for by the contract until the
  date of payment in full or demand for payment in full.
         (d)  A payment on a loan contract authorized by this section
  shall be applied to the borrower's account in the following order
  or, at the lender's option, under another method of applying a
  payment that is more favorable to the borrower:
               (1)  the straight line allocation of the acquisition
  charge using the original scheduled term of the loan based on the
  proportional scheduled payment that was paid or scheduled to be
  paid;
               (2)  default charges authorized by Section 342.257;
               (3)  return check fees authorized by Section 3.506,
  Business & Commerce Code;
               (4)  any other charges authorized by this subchapter;
               (5)  accrued interest authorized by this section; and
               (6)  principal.
         SECTION 8.  The changes in law made by this Act apply only to
  a loan made on or after the effective date of this Act.  A loan made
  before the effective date of this Act is governed by the law in
  effect on the date the loan was made, and the former law is
  continued in effect for that purpose.
         SECTION 9.  This Act takes effect September 1, 2013.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1251 passed the Senate on
  April 11, 2013, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 20, 2013, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1251 passed the House, with
  amendment, on May 7, 2013, by the following vote: Yeas 140,
  Nays 4, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor