This California Senate bill 318 is creating rules for loans between $300-$2,500. I glanced at the bill and it is textbook terrible. Here are the low lights. Beyond the price control here, it’s poorly planned. The compliance will stink on this one.
- 36% interest rate cap (essentially).
- Can only refinance once.
- Can only refinance after a 60% paydown and borrower is current.
- Can charge a 7% administration fee or $90, whichever is less. Lesser of 6 % after that or $75 administrative fee on next loan. Can only charge every four months.
- You have to offer them financial counseling when they refi.
- Gross monthly income requirements.
My estimation puts this at a 50%-100% APR. If you lose more than 5% of the loans, you’re probably in the red.
