SB257 Alabama 2022 Session

Summary

Primary Sponsor

Will BarfootSenator

Republican

Session

Regular Session 2022

Title

Banking and financial institutions, small loans, authorizing limited closing fees, Sec. 5-18-15 am'd.

Summary

SB257 would allow banks to charge a limited closing fee on small loans under $1,500, with partial refunds if the loan is prepaid.

What This Bill Does

It adds authority for licensees to impose a closing fee on small loans under $1,500, capped at 4% of the loan amount or $50, and allows this fee to be financed from the loan proceeds. The bill also sets refund rules: when the loan is paid off early, a portion of the total charges must be refunded according to schedules, and the lender may retain up to $25 of the closing fee upon prepayment. It preserves existing charges and refund mechanisms for other loan costs, and includes an estate protection provision for decedents. The act would take effect immediately after governor approval.

Who It Affects

• Borrowers who take small loans under $1,500: could incur a new closing fee (subject to the cap) and may receive partial refunds if they pay off early.
• Banks and other financial institutions that make small loans: authorized to charge a closing fee within the stated cap and to finance it from loan proceeds, with specific refund rules.
• Decedent borrowers' estates: protected from claims for certain charges on loans that include acquisition or installment charges.

Key Provisions

• Authorizes a closing fee on small loans under $1,500, capped at the lesser of 4% of the loan amount or $50, and allows the fee to be paid from loan proceeds and financed by the lender.
• Closing fee refunds: upon full prepayment, the borrower must be refunded a portion of total charges per time-based schedules, with the licensee allowed to retain up to $25 of the closing fee upon prepayment.
• If a loan is prepaid in full or partially after multiple installments, refunds or charge adjustments are provided under the prepayment refund rules; the licensee may reschedule remaining installments and precompute charges as applicable.
• No claims against a decedent borrower's estate for unpaid debt that includes acquisition or installment charges under this subsection.
• Effective date: the act becomes effective immediately after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Small Loans