HB 4116 amends Michigan’s pawnbroker licensing law to increase the maximum interest rate a licensed pawnbroker may charge on a loan from 3% to 5% per month. It also updates the required written pawn ticket disclosure so that the statutory warning reflects the new 5% monthly cap, while continuing to state that charging more than the allowed amount voids the loan and requires surrender of the pledged item on demand. The bill keeps the existing rule that interest cannot be charged in advance, must be calculated on unpaid monthly balances without compounding, and that pawnbrokers may not charge examination fees or other charges beyond those authorized by law.
The bill also preserves the separate storage charge allowance, permitting a pawnbroker to charge $3.00 per month or fraction of a month for storage of unencumbered personal property under a single pledge or pawn. In practical terms, the measure raises the ceiling on the cost of pawn loans while leaving the rest of the regulatory structure intact. The bill is tie-barred to HB 4115, meaning it does not take effect unless that companion bill is also enacted into law.
Impact
HB 4116 would amend sections 8 and 9 of 1917 PA 273, codified at MCL 446.208 and 446.209, by changing the statutory interest limit for pawn loans and conforming the required consumer notice to that new limit. It would directly affect licensed pawnbrokers and borrowers in Michigan by allowing a higher monthly finance charge and preserving the existing storage-fee framework, while continuing to prohibit excess charges, advance interest, compounding, and examination fees. Because of the tie-bar, the bill’s legal effect depends on enactment of HB 4115.
Sentiment
The available voting history suggests the bill was generally supported, at least in the House, with a 15-0 committee report and a 83-21 vote on third reading and immediate effect. There are no committee transcripts provided, so the record does not show detailed debate or negotiated amendments. Overall, the bill appears to have advanced with clear majority support and limited recorded opposition.
Contention
The main point of contention is the increase in the allowable pawn loan interest rate from 3% to 5% per month, which benefits pawnbrokers but raises borrowing costs for consumers who use pawn loans. Supporters likely view the change as an update to the industry’s pricing structure, while opponents may see it as a higher-cost credit burden on borrowers. The tie-bar to HB 4115 is also notable because it makes the bill contingent on companion legislation, indicating the two measures are intended to operate together.