Arizona Proposed H.B. 2496 Relating to Consumer Access Line of Credit

Arizona consumers, with any luck, will have access to a new installment loan financial product to help them meet emergencies. ¬†Since the payday loan laws “sunset” several years ago, Arizona borrowers have had few choices to solve their short-term financial worries.

House Bill 2496 would allow people with poor credit ratings to borrow up to $2,500 a year at the low, low interest rate of 164.25 percent.

Here are some highlights from the new Arizona Bill 2496:

Defines a CALC loan plan as a written or electronic agreement in a record between a licensee and
a consumer establishing an open-end credit plan under which the licensee contemplates repeated
noncommercial loans for personal, family or household purposes that are all of the following:
a) unsecured by personal property or real estate.
b) without fixed maturities or limitation as to the length of term.
c) subject to prepayment in whole or in part at any time without charge or penalty

Stipulates that a person is engaged in the business of entering into CALC loan plans and making CALC loans if the person induces a consumer, while located in this state, to enter into a CALC loan plan or making a CALC loan in this state through the use of the internet, a fax, a telephone or another means.

How to Start Installment Loan Business

How to Start Installment Loan Business

Stipulates that this chapter does not prevent a licensee from conducting the business of entering into CALC loan plans and making CALC loans over the internet.

Fees 42. Allows a licensee to only charge and collect a daily transaction fee to defray the ordinary costs of opening, administering and terminating a CALC loan plan, including certain specified costs.

43. States that the daily transaction fee is not interest and may not exceed a daily rate of 0.45 percent of the outstanding principal balance.

44. Prohibits a licensee from entering into a CALC loan plan or making a CALC loan plan having an annual percentage rate greater than that set forth in federal law to a person who is either: a member of the United States Armed Forces who is on active duty, on active national Guard and reserve duty, or a dependent of one of these persons.

45. Prohibits a CALC loan plan from having an outstanding principal balance in excess of $2,500 at any time.

46. Requires a CALC loan plan to require a minimum payment on or before the due date of each billing cycle in an amount sufficient to reduce any outstanding principal balance by at least eight percent per month or an amount calculated to pay off the entire principal within one calendar year, whichever is greater.

47. Allows a licensee, if a consumer defaults under the terms of a CALC loan plan and the licensee refers the consumer’s account to an attorney, to: a) if allowed under the CALC loan plan, charge and collect from the consumer reasonable attorney fees; b) refer the consumer to an approved consumer credit counseling agency and offer concessions with regard to daily transaction fee, repayment schedule and other terms as agreed; and c) charge and collect interest following the default of the consumer or a judgment in favor of the licensee at a periodic interest rate not to exceed the United States prime rate plus 15 percent a year.

Ability to Repay

57. Requires a licensee to underwrite each CALC loan to determine a consumer’s ability and willingness to repay the CALC loan, before entering into a new CALC loan plan or increasing the credit limit of an existing CALC loan plan. 58. Requires a licensee to obtain information from the consumer relating to the consumer’s income and expenses and to validate a consumer’s supplied information using at least one consumer credit report. 59. Allows a licensee to validate a consumer’s supplied information using other reasonably reliable sources such as debt verification services, the consumer’s bank statements, tax returns, payroll information, benefits or child support statements or other information that is either provided by the consumer or is commercially available online.

63. Prohibits a consumer from having more than one CALC loan plan at any one time.

64. Allows the Superintendent to require licensees to confirm through the use of a state-approved database that a consumer does not have more than one outstanding CALC loan plan at any one time or that a CALC loan does not cause the CALC loan plan to exceed an outstanding principal balance in excess of $2,500.

65. Requires that the database: a) be capable of real-time queries; b) be selected by the Superintendent through an open bidding and review process; and c) have licensee-paid usage fees for the database and not have consumer-paid usage fees.

113.Allows a consumer, if a consumer access line of credit has accumulated a past-due balance but has not defaulted, once per year, to request, and the licensee shall approve, that the past-due balance be repaid on an interest-free balance in equal installments to be added to the minimum payment for the outstanding line.

114.Allows a consumer who has a past-due balance and who has not defaulted and a licensee to agree to other repayment options by mutual agreement.

115.Allows a consumer to request and a licensee to approve a lower pay-down rate or minimum payment, except that a minimum payment that would fail to reduce outstanding principal by at least two percent per billing cycle may not be approved.

House Bill 2496