California Alternative Payday Loan SB 318

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.



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