Bill Summary – FastDemocracy

Legislative Analysis
                                                                                       Phone: (517) 373-8080
PAYDAY LOAN INTEREST CAP
                                                                                       http://www.house.mi.gov/hfa
Senate Bill 632 as passed by the Senate                                                Analysis available at
Sponsor: Sen. Sarah Anthony                                                            http://www.legislature.mi.gov
House Committee: Insurance and Financial Services
Senate Committee: Finance, Insurance, and Consumer Protection
Complete to 4-17-24
SUMMARY:
           Senate Bill 632 would amend the Deferred Presentment Service Transaction Act to limit the
           interest rate that can be charged on a deferred presentment transaction (i.e., a payday loan).
           Currently, the act allows lenders to enter into one transaction of up to $600 with a customer
           and charge a service fee for each $100 increment of the loan. For a $600 loan, the total service
           fee can be up to $76. The act does not place a cap on interest rates.
           The bill would eliminate the ability to charge a service fee and would cap the annual interest
           rate on payday loans at 36% annually. The annual percentage would be calculated as a military
           annual percentage rate under 32 CFR 232.4. 1
           The bill would also provide than any transaction that violated the provisions of limitations on
           payday loans under section 33 of the act, including the interest rate cap, would be void and
           unpayable.
           The bill would take effect 90 days after it is enacted.
           MCL 487.2153
BACKROUND:
           The bill is identical to House Bill 5290 as it was introduced.
           House Bill 4251 of the 2019-20 legislative session, which contained similar provisions,
           received a hearing but was not reported from committee. 2
FISCAL IMPACT:
           Senate Bill 632 would not have a fiscal impact on any units of state or local government.
                                                                    Legislative Analyst: Alex Stegbauer
                                                                         Fiscal Analyst: Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
1
    https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-M/part-232/section-232.4
2
    https://www.legislature.mi.gov/Bills/Bill?ObjectName=2019-HB-4251
House Fiscal Agency                                                                                      Page 1 of 1
Statutes affected: 
Senate Introduced Bill: 487.2153
As Passed by the Senate: 487.2153