Vote Smart's Synopsis:

Vote to pass a bill that establishes regulations for consumer short-term lenders.

Highlights:

• Prohibits a consumer short-term lender from granting a loan to a borrower who meets any of the following conditions (Sec. 3):
• The borrower is not presently indebted to a consumer short-term lender;
• The borrower does not have 10 or more consumer short-term loans within the preceding 12 months; and
• The borrower has allowed 45 days to elapse after the satisfaction of the fourth and seventh consumer short-term loans within the preceding 12 months. 

• Requires a consumer short-term lender to examine the following records prior to engaging in a short-term consumer loan (Sec. 3):
• Any records on site or maintained at other locations owned by the lender; and
• Any information from a consumer reporting service. 

• Requires a consumer short-term lender to verify whether the borrower is a “covered borrower” (Sec. 3).

• Defines “covered borrower” as the following (Sec. 3):
• A regular or reserve member of the Army, Navy, Marine Corps, Air Force, or Coast Guard, serving for a period of at least 30 days; or
• A member's spouse, child, or an individual for whom the member provided more than one-half of the individual's support for 180 days immediately preceding an extension of consumer credit.

• Prohibits a consumer short-term lender from imposing an annual percentage rate greater than 36 percent to a covered borrower (Sec. 3).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that establishes regulations for consumer short-term lenders.

Highlights:

• Requires a consumer short-term lender to determine if a potential borrower has the “reasonable” ability to repay the loan by at least verifying his or her debt-to-income ratio and checking his or her credit history (Sec. 4). 

• Defines “debt-to-income ratio” as the ratio of a borrower’s total monthly debt obligations to the borrower’s gross monthly income (Sec. 2). 

• Prohibits a consumer short-term lender from providing a loan to a borrower who meets the following conditions (Sec. 4):
• The borrower’s debt-to-income ratio would equal more than 41 percent as a result of payments on the short-term loan being requested;
• The borrower has received 4 loans within the past year; or
• The borrower would accumulate consumer short-term debt totaling more than 90 days as a result of the short-term loan being requested. 

• Exempts a consumer short-term lender from the 4 loans per year limit authorized by this bill if the lender charges no more than 36 percent interest or the borrower meets any of following conditions (Sec. 4):
• The borrower cannot obtain a loan elsewhere and lack of funds would result in a failure to make a schedule student loan payment, residential payment, or child support payment;
• The borrower is an honorably discharged military veteran; or
• The borrower falls beneath the poverty threshold as defined by the U.S Department of Health and Human Services.

Full Bill Text