BILL REQ. #:  S-4237.1 

Read first time 01/19/2006.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     AN ACT Relating to the limits on the amount, interest, terms, and fees for small loans; and amending RCW 31.45.073.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 31.45.073 and 2003 c 86 s 8 are each amended to read as follows:
     (1) No licensee may engage in the business of making small loans without first obtaining a small loan endorsement to its license from the director in accordance with this chapter. An endorsement will be required for each location where a licensee engages in the business of making small loans, but a small loan endorsement may authorize a licensee to make small loans at a location different than the licensed locations where it cashes or sells checks. A licensee may have more than one endorsement.
     (2) ((The termination date of a small loan may not exceed the origination date of that same small loan by more than forty-five days, including weekends and holidays, unless the term of the loan is extended by agreement of both the borrower and the licensee and no additional fee or interest is charged.)) A licensee that has obtained the required small loan endorsement may not make a small loan under this chapter unless (a) the licensee has assessed the borrower's ability to repay the loan, including the borrower's current and expected income, current obligations, and employment, and (b) at consummation of the loan, the borrower's total monthly debts, including the small loan, do not exceed forty-five percent of the borrower's monthly gross income. Each small loan must have a minimum term of not less than two weeks, including weekends and holidays, for each fifty-dollar amount owed on the small loan. The maximum principal amount of any small loan, or the outstanding principal balances of all small loans made by a licensee to a single borrower at any one time, may not exceed ((seven)) five hundred dollars.
     (3) A licensee that has obtained the required small loan endorsement may charge interest or fees for small loans not to exceed ((in the aggregate fifteen percent of the first five hundred dollars of principal. If the principal exceeds five hundred dollars, a licensee may charge interest or fees not to exceed in the aggregate ten percent of that portion of the principal in excess of five hundred dollars)) thirty-six percent per annum. The rate charged on the outstanding balance after maturity shall not be greater than the rate charged during the loan term. If a licensee makes more than one loan to a single borrower, ((and)) the aggregated principal of all loans made to that borrower ((exceeds)) may not exceed five hundred dollars at any one time((, the licensee may charge interest or fees not to exceed in the aggregate ten percent on that portion of the aggregated principal of all loans at any one time that is in excess of five hundred dollars)). The director may determine by rule which fees, if any, are not subject to the interest or fee limitations described in this section. It is a violation of this chapter for any licensee to knowingly loan to a single borrower at any one time, in a single loan or in the aggregate, more than the maximum principal amount described in this section.
     (4) In connection with making a small loan, a licensee may advance moneys on the security of a postdated check. The licensee may not accept any other property, title to property, or other evidence of ownership of property as collateral for a small loan. The licensee may accept only one postdated check per loan as security for the loan. A licensee may permit a borrower to redeem a postdated check with a payment of cash or the equivalent of cash. The licensee may disburse the proceeds of a small loan in cash, in the form of a check, or in the form of the electronic equivalent of cash or a check.
     (5) No person may at any time cash or advance any moneys on a postdated check or draft in excess of the amount of goods or services purchased without first obtaining a small loan endorsement to a check casher or check seller license.