Enacts the Louisiana Consumer Alternative Installment Loan Act (RE INCREASE SG EX See Note)
Summary
HB 513 creates the Louisiana Consumer Alternative Installment Loan Act, a new framework in Title 9 governing certain consumer installment loans made by licensed lenders. The bill authorizes lenders making precomputed consumer loans of $5,500 or less to choose between existing Louisiana Consumer Credit Law rates and fees or a new pricing structure that allows a monthly finance charge up to 59% APR, calculated using the actuarial method. It also sets repayment rules, requires substantially equal monthly installments, addresses rebates for prepayment, and limits additional fees and charges except for specified delinquency charges.
The bill also adds consumer protections and disclosure requirements. It prohibits conditioning credit on repayment by preauthorized electronic fund transfers or post-dated checks, requires borrowers to be allowed to choose among payment methods offered by the lender, bars lenders from holding checks or accepting future-dated checks within 20 days of making the loan, and requires a standardized notice in loan agreements identifying the business as licensed and regulated by the Louisiana Office of Financial Institutions. The Office of Financial Institutions must also publish an annually adjusted maximum loan amount based on the Consumer Price Index, and the commissioner is given rulemaking and enforcement authority under the Consumer Credit Law.
Impact
HB 513 adds a new subpart to the Louisiana Revised Statutes governing consumer alternative installment loans and expands the regulatory authority of the commissioner and the Office of Financial Institutions over these products. It also repeals R.S. 6:661.1(A)(2), which removes an existing credit union restriction tied to fixed-asset investment levels and branch opening criteria. The bill therefore affects both consumer lending practices and a specific credit union operational requirement, while incorporating parts of the existing Consumer Credit Law by reference.
Sentiment
The bill appears to have been supported in the House but faced significant resistance in the Senate. It passed the House on final passage 65-29, indicating majority support but notable opposition, and then failed in the Senate on final passage 7-30, suggesting broad concern among senators. The overall sentiment reflected in the votes is mixed to negative outside the House, with the Senate vote showing strong opposition to the measure as drafted.
Contention
The main point of contention is the bill’s authorization of very high-cost consumer loans, including a 59% APR ceiling on loans up to $5,500, which likely raised concerns about consumer protection, predatory lending, and the burden on low-income borrowers. Another likely area of concern is the bill’s restructuring of repayment and fee rules, including delinquency charges and prepayment treatment, which may have been viewed as favoring lenders. The repeal of the credit union fixed-asset limitation also appears to have been a separate issue affecting financial institutions, though the available record does not show detailed committee debate.