SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 632 (as introduced 11-1-23) (Senate-passed version)
Sponsor: Senator Sarah Anthony
Committee: Finance, Insurance, and Consumer Protection
CONTENT
The bill would amend the Deferred Presentment Service Transactions Act to allow a deferred presentment service transaction (payday loan) provider to charge as part of a service fee an annual percentage rate of 36% instead of the current graduated rate.
Generally, the Act requires licensure of payday loan providers and allows a licensee to enter one payday loan transaction of up to $600 with a customer. The Act allows a licensee to charge a service fee for each transaction.
Currently, a service fee is earned by the licensee on the date of the transaction and is not interest. A licensee may charge as part of the service fee an amount that does not exceed the aggregate of the following, as applicable:
-- Fifteen percent of the first $100 of the deferred presentment service transaction.
-- Fourteen percent of the second $100 of the deferred presentment service transaction.
-- Thirteen percent of the third $100 of the deferred presentment service transaction.
-- Twelve percent of the fourth $100 of the deferred presentment service transaction.
-- Eleven percent of the fifth $100 of the deferred presentment service transaction.
-- Eleven percent of the sixth $100 of the deferred presentment service transaction.
The bill would delete the specific language governing service fees described above and instead would allow a licensee to charge an annual percentage rate of 36%. ("Annual percentage rate" would mean a rate calculated for a military annual percentage under 32 CFR 232.4, which generally caps an annual percentage rate at 36% and specifies that the rate includes any credit insurance premium or fee, any finance charge, and any add-on products sold in connection with the credit.)
The bill also specifies that a transaction that violated the bill would be void and uncollectable as to any principal, fee, or charge.
The bill would take effect 90 days after its enactment.
MCL 487.2153 Legislative Analyst: Nathan Leaman
FISCAL IMPACT
The bill would have no fiscal impact on State or local government.
Michael Siracuse
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.