HB 436 — The maximum permitted rate of interest, sum of fees

90R1842 MLH-D By: Bucy H.B. No. 436 relating to the maximum permitted rate of interest, sum of fees, and other amounts that may be charged in connection with certain extensions of credit; creating a criminal offense.

SECTION 1. Subchapter M, Chapter 342, Finance Code, is amended by adding Section 342.606 to read as follows: Sec. 342.606. MAXIMUM INTEREST RATES. (a) Except as provided by Subsection (b), the maximum annual percentage rate that may be contracted for, charged, or received from a borrower for a deferred presentment transaction is 36 percent a year. (b) If another law provides for a restriction or limitation on fees, rates, or charges that results in a total cost to a borrower that is less than the total cost to the borrower under the maximum annual percentage rate allowed by Subsection (a), that law prevails. (c) A deferred presentment transaction entered into in violation of this section is void and unenforceable. (d) A lender commits an offense if the lender enters into a deferred presentment transaction in violation of this section. An offense under this subsection is a Class A misdemeanor.

SECTION 2. Subchapter D, Chapter 393, Finance Code, is amended by adding Section 393.3035 to read as follows: Sec. 393.3035. RESTRICTION ON CHARGES CHARGED IN CONNECTION WITH EXTENSION OF CONSUMER CREDIT. (a) For purposes of this section, the annual percentage rate of an extension of consumer credit is calculated including the total charges charged to the consumer in connection with the extension of consumer credit, including interest, lender charges, and any fees or any other valuable consideration received by the credit services organization or a representative of the credit services organization. (b) The annual percentage rate of an extension of consumer credit that a credit services organization obtains for a consumer or assists a consumer in obtaining may not exceed 36 percent. (c) An extension of consumer credit entered into in violation of this section is void and unenforceable.

SECTION 3. Sections 342.606 and 393.3035, Finance Code, as added by this Act, apply only to a loan or extension of consumer credit, as applicable, made on or after the effective date of this Act. A loan or extension of consumer credit made before the effective date of this Act is governed by the law in effect on the date the loan or extension of consumer credit was made, and the former law is continued in effect for that purpose. For purposes of this section, a refinance of a loan or extension of consumer credit is considered made on the date the loan or extension of consumer credit being refinanced was made.

SECTION 4. This Act takes effect September 1, 2027.