2023 Texas Statutes › Finance Code › Title 4 - Regulation of Interest, Loans, and Financed Transactions › Subtitle B - Loans and Financed Transactions › Chapter 342 - Consumer Loans › Subchapter E. Interest Charges on Non-Real Property Loans › Section 342.201. Maximum Interest Charge and Administrative Fee

Sec. 342.201.  MAXIMUM INTEREST CHARGE AND ADMINISTRATIVE FEE.  (a)  A loan contract under this chapter that is a regular transaction and is not secured by real property may provide for an interest charge on the cash advance that does not exceed the amount of add-on interest equal to the amount computed for the full term of the contract at an add-on interest amount equal to:
(1)  $18 for each $100 per year on the part of the cash advance that is less than or equal to the amount computed under Subchapter C, Chapter 341, using the reference base amount of $300;  and
(2)  $8 for each $100 per year on the part of the cash advance that is more than the amount computed for Subdivision (1) but less than or equal to an amount computed under Subchapter C, Chapter 341, using the reference base amount of $2,500.
(b)  For the purpose of Subsection (a):
(1)  when the loan is made an interest charge may be computed for the full term of the loan contract;
(2)  if the period before the first installment due date includes a part of a month that is longer than 15 days, that portion of a month may be considered a full month;  and
(3)  if a loan contract provides for precomputed interest, the amount of the loan is the total of:
(A)  the cash advance;  and
(B)  the amount of precomputed interest.
(c)  A loan contract under this chapter that is an irregular transaction and is not secured by real property may provide for an interest charge, using any method or formula, that does not exceed the amount that, having due regard for the schedule of installment payments, would produce the same effective return as allowed under this section if the loan were payable in equal successive monthly installments beginning one month from the date of the contract.
(d)  A loan contract under this chapter that is not secured by real property may provide for a rate or amount of interest computed using the true daily earnings method or the scheduled installment earnings method that does not exceed the alternative interest rate as computed under Subchapter A, Chapter 303.  Interest may accrue on the principal balance and amounts added to principal after the date of the loan contract from time to time unpaid at the rate provided for by the contract until the date of payment in full or demand for payment in full.
(e)  A loan contract under this chapter that is not secured by real property may provide for a rate or amount of interest computed using the true daily earnings method or the scheduled installment earnings method that does not exceed:
(1)  30 percent a year on that part of the cash advance that is less than or equal to the amount computed under Subchapter C, Chapter 341, using the reference base amount of $500;
(2)  24 percent a year on that part of the cash advance that is more than the amount computed for Subdivision (1) but less than or equal to an amount computed under Subchapter C, Chapter 341, using the reference base amount of $1,050;  and
(3)  18 percent a year on that part of the cash advance that is more than the amount computed for Subdivision (2) but less than or equal to an amount computed under Subchapter C, Chapter 341, using the reference base amount of $2,500.
(e-1)  The interest charge under Subsection (e) must be contracted for, charged, or received using the scheduled installment earnings method or the true daily earnings method under one of the following methods:
(1)  applying the applicable daily rate to each part of the unpaid principal balance corresponding to the brackets described by Subsection (e) for the actual or scheduled number of days during a payment period; or
(2)  applying a single equivalent daily rate to the unpaid principal balance for the actual or scheduled number of days during a payment period, where the single equivalent daily rate is determined at the inception of the loan using the scheduled installment earnings method and would earn an amount of interest authorized under Subsection (e) if the debt were paid to maturity according to the schedule of payments.
(f)  A loan contract under this subchapter may provide for an administrative fee in an amount not to exceed $25 for a loan of more than $1,000 or $20 for a loan of $1,000 or less.  The administrative fee is considered earned when the loan is made or refinanced and is not subject to refund.  An administrative fee is not interest.  A lender refinancing the loan may not contract for or receive an administrative fee for the loan more than once in any 180-day period, except that if the loan has an interest charge authorized by Subsection (e) the lender may not contract for or receive the administrative fee more than once in any 365-day period.  One dollar of each administrative fee may be deposited with the comptroller for use in carrying out the finance commission's responsibilities under Section 11.3055.
(g)  The finance commission by rule may prescribe a reasonable maximum amount of an administrative fee for a loan contract under this subchapter that is greater than the maximum amount authorized by this section for the amount of the loan.
Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.19(a), eff. Sept. 1, 1999;  Acts 1999, 76th Leg., ch. 935, Sec. 2.01, eff. Sept. 1, 1999;  Acts 2001, 77th Leg., ch. 916, Sec. 1, eff. Sept. 1, 2001;  Acts 2003, 78th Leg., ch. 211, Sec. 2.03(a), eff. June 16, 2003.
Amended by:
Acts 2013, 83rd Leg., R.S., Ch. 784 (S.B. 1251), Sec. 2, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 784 (S.B. 1251), Sec. 3, eff. September 1, 2013.
Acts 2019, 86th Leg., R.S., Ch. 1003 (H.B. 3855), Sec. 1, eff. September 1, 2019.