Financial institutions: loans: interest rates.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Banking and Finance
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Overview
This bill changes the interest rates and fees that financial institutions can charge for loans and deferred deposit transactions in California. Specifically, it limits interest rates on loans under $2,500 to those established by the Military Lending Act and its regulations, effective January 1, 2026. It also caps the total fee for deferred deposit transactions at the same rate. The bill aims to protect consumers from excessively high interest rates and fees on small loans and deferred deposit transactions by aligning them with federal standards.
Key provisions
- Limits interest rates on loans under $2,500 to the Military Lending Act rate.
- Caps the total fee for deferred deposit transactions at the Military Lending Act rate.
- Aligns interest rate and fee structures with the Military Lending Act.
- Specifies the effective date of the changes as January 1, 2026.
- Prohibits charging additional fees for loan extensions or payment plans.
- Addresses liability for deferred deposit transactions.
- Clarifies fees for dishonored checks.
- States that no reimbursement is required from the state for local agencies or school districts due to the creation of new crimes.
Who is affected
- Financial Institutions
- Borrowers of small loans
- Customers of deferred deposit transactions
- Licensees operating under the California Financing Law (CFL)
- Licensees operating under the California Deferred Deposit Transaction Law (CDDTL)
Bill text
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Sponsors
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2 on record
Primary sponsor
Cosponsor
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