SB284 Alabama 2017 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2017

Title

Banking, loans and consumer credit transactions, small loans, acquisition charge prohibited on refinances within first six months, deferred presentment transaction, term set at 30 days, total transactions limited, collection activity limited, repayment plan for certain transactions set at three months, interest on loan over $2,000 limited, Secs. 5-18-15, 5-18A-3, 5-18A-12, 5-18A-13, 8-8-5 am'd.

Summary

SB284 rewrites Alabama's consumer credit rules by tightening small loans and payday lending, banning pawns of titled property, capping large-loan interest, and expanding licensing and oversight.

What This Bill Does

It sets a six-month minimum term for small loans using the alternative rate and bars charging an extra acquisition fee if refinanced within the first six months. It tightens payday lending by limiting the number of deferred presentment transactions to four per year, setting all terms to 30 days with one automatic three-month extension, and requiring licensing via a national database with clear fee disclosures. It bans pawn transactions involving titled personal property and caps interest on loans over $2,000 at 60% annualized, while preserving current rates for smaller loans. It expands licensing requirements for deferred presentment services and requires lenders to use a nationwide system and to disclose all fees to borrowers.

Who It Affects

• Small-loan borrowers (under $1,000) who use the alternative-rate option, due to new minimum term and refinancing rules.
• Deferred presentment/payday loan borrowers, pawn customers, and borrowers with loans over $2,000, due to new limits, terms, caps, and licensing requirements.

Key Provisions

• Minimum six-month term for small loans that use the alternative rate; no additional acquisition charge if refinanced within the first six months (refinancing defined as within seven days of payoff).
• For small loans using the alternative rate, maximum term remains 12 months and the acquisition charge/ installment handling charges are limited; refunds on prepaid loans allocate refunds according to schedules, but the acquisition charge is not refundable.
• Deferred presentment (payday) loans capped at $500 per transaction and a maximum fee of 17.5%; term set at 30 days with one automatic three-month extension; up to four DPS transactions per 12 months; no rollover within seven days of a prior transaction; licensees must use a national database and provide clear disclosures.
• DPS borrowers may not have more than four transactions in a 12-month period; after two transactions with the same borrower, the balance becomes due unless paid; extended repayment options permit up to three monthly installments with up to 3% per month on the outstanding balance during extension.
• No pawning of titled personal property; pawn transactions must involve other types of secured lending under applicable chapters; effective date August 1, 2017.
• Loans over $2,000 are capped at a 60% annualized interest rate; smaller loans retain existing rate structure (3% per month up to $200 and 2% per month above $200).
• State Banking Department may require licensing through the Nationwide Multistate Licensing System and Registry, including background checks and access to a statewide/national database to monitor deferred presentment transactions.
• Licensees must clearly disclose all fees and charges in writing before entering into a deferred presentment or loan agreement; a conspicuous fee schedule must be displayed at all times.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Banking Department