ATLANTA – (BUSINESS WIRE) – California Governor Gavin Newsom signed Law AB539, the Fair Access to Credit Act, in response to the growing epidemic of high-cost loans currently permitted under California Financing Law(1). According to the most recent Business Monitoring Department report, over 55% of consumer loans between $ 2,500 and $ 5,000 were billed at an annual rate of 100% or more.(2). The overwhelming, bipartisan support for AB539 in this year’s legislative session was a startling rebuke to the high-cost lobbying efforts that had thwarted previous attempts to implement more reasonable rates under California’s finance law. .(3).
Co-authored by Banking Assembly President Monique Limon and Assembly Member Tim Grayson, both in attendance to witness the governor’s signing, the bill benefited from a broad and diverse coalition of supporters, alongside the main sponsor, Los Angeles County. In a statement released by County Supervisor Hilda Solis, who, along with her fellow supervisor Kuehl, led the county’s efforts to tackle high-cost loans, she expressed thanks to the broad coalition of local governments, for community and faith-based organizations and responsible lenders. for their hard work in advancing the legislation(4).
Bobby Aiken, CEO of Lendmark Financial Services, said: “We are very pleased to have contributed to this effort to bring both stability and clarity to the California consumer lending market. As an event lender, we Whether planned or unplanned, we recognize the importance to consumers of having high quality credit that is both accessible and affordable, and this action reinforces the importance of promoting beneficial alignment of interests between borrowers and lenders. ”
The bill, which comes into force on January 1, 2020, will impose a maximum rate of 36%, plus the federal funds rate, on loans of $ 2,500 or more but less than $ 10,000 which, under the law current, have no rate limits. Other changes include a minimum loan term of 12 months to promote reasonable repayment schedules and a requirement that before disbursing loan proceeds, credit score resources be provided to consumers to help them better understand the loan. importance of a credit score and how it can be improved.
In their letter of support AB539, Californians for Economic Justice, one of California’s leading advocacy coalitions of community and faith-based nonprofit organizations, stated that “AB539 will protect borrowers from the predatory practices of three-way lenders. numbers by imposing a reasonable interest rate cap. installment loans that give lenders a fair return and give borrowers a fair chance to repay their loan. “(5)
After the bill was successfully passed, Mr Aiken added: “At Lendmark we will always seek to be on the safe side of issues like this. Access to credit should not be defined as credit at all. We commend Bank President Limon for his leadership in taking an important and balanced approach to a very complex and difficult problem. It is a measured and well-thought-out solution that will benefit borrowers across the country. California and will provide responsible lenders with both advice and certainty to meet the state’s growing consumer credit market needs. ”
Governor Newsom signs law to tackle predatory lending in California
Annual report on the operations of financial companies 2018
High-interest loans could soon be capped in California under plan approved by lawmakers
Supervisor Solis statement on Governor Newsom’s signing of AB539 (high cost loans)
Information about AB539
About Lendmark Financial Services
Based in Lawrenceville, Georgia, Lendmark Financial Services is a consumer finance company specializing in providing a variety of personal loans, auto loans and retail sales finance services. Since its inception in 1996, Lendmark has experienced significant growth following its original mission of meeting consumers’ personal loan needs for both planned and unforeseen life events. Today, with 331 branches Across 19 states from coast to coast, Lendmark continues to grow as the financial services organization of choice for its retail clients and business partners by providing superior, consistent and reliable service with every transaction. For more information visit www.lendmarkfinancial.com.