Bill Text: IA HF87 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act establishing maximum interest rates to be charged by pawnbrokers on pawnbroking transactions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-01-26 - Subcommittee: Cownie, Grassley and Jacoby. H.J. 131. [HF87 Detail]

Download: Iowa-2017-HF87-Introduced.html

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House File 87 - Introduced




                                 HOUSE FILE       
                                 BY  WESSEL=KROESCHELL

                                      A BILL FOR

  1 An Act establishing maximum interest rates to be charged by
  2    pawnbrokers on pawnbroking transactions.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 535.2, subsection 1, unnumbered
  1  2 paragraph 1, Code 2017, is amended to read as follows:
  1  3    Except as provided in subsection subsections 2 and 8, the
  1  4 rate of interest shall be five cents on the hundred by the
  1  5 year in the following cases, unless the parties shall agree in
  1  6 writing for the payment of interest at a rate not exceeding the
  1  7 rate permitted by subsection 3:
  1  8    Sec. 2.  Section 535.2, Code 2017, is amended by adding the
  1  9 following new subsection:
  1 10    NEW SUBSECTION.  8.  a.  Notwithstanding any other provision
  1 11 of this section, the maximum rate of interest charged by a
  1 12 pawnbroker on a pawnbroking transaction shall not be more
  1 13 than ten percent per month on a pawnbroking transaction of
  1 14 twenty=five dollars or less, seven percent per month on a
  1 15 pawnbroking transaction of more than twenty=five dollars and
  1 16 less than one hundred dollars, or five percent per month on a
  1 17 pawnbroking transaction of one hundred dollars or more.
  1 18    b.  For the purposes of this subsection:
  1 19    (1)  "Pawnbroker" means any person authorized by law to
  1 20 engage in the business of conducting pawnbroking transactions.
  1 21 "Pawnbroker" does not include any bank regulated by this state,
  1 22 the comptroller of the currency of the United States, the
  1 23 federal deposit insurance corporation, the board of governors
  1 24 of the federal reserve system, or any other federal or state
  1 25 authority or their affiliates; any bank or savings association
  1 26 whose deposits or accounts are eligible for insurance by
  1 27 the federal deposit insurance corporation or any successor
  1 28 thereto; any state or federally chartered credit union; or any
  1 29 industrial loan or thrift company or regulated lender subject
  1 30 to licensing and regulation by the department of commerce.
  1 31    (2)  "Pawnbroking transaction" means any loan on the security
  1 32 of pledged goods or any purchase of pledged goods on the
  1 33 condition that the pledged goods are left with the pawnbroker
  1 34 and may be redeemed or repurchased by the seller for a fixed
  1 35 price within a fixed period of time.
  2  1    (3)  "Person" means an individual, partnership, corporation,
  2  2 limited liability company, joint venture, trust, association,
  2  3 or any other legal entity, however organized.
  2  4    (4)  "Pledged goods" means tangible personal property
  2  5 other than securities, bank drafts, or printed evidence
  2  6 of indebtedness, that are purchased by, deposited with,
  2  7 or otherwise actually delivered into the possession of a
  2  8 pawnbroker in connection with a pawnbroking transaction.
  2  9                           EXPLANATION
  2 10 The inclusion of this explanation does not constitute agreement with
  2 11 the explanation's substance by the members of the general assembly.
  2 12    This bill establishes maximum interest rates that may be
  2 13 charged by pawnbrokers on pawnbroking transactions.
  2 14    Currently, Code section 535.2 establishes the maximum lawful
  2 15 interest rates chargeable on loans. The bill provides an
  2 16 exception to this maximum interest rate regarding the maximum
  2 17 interest rates that pawnbrokers can charge on pawnbroking
  2 18 transactions. The bill provides that the maximum interest rate
  2 19 for pawnbroking transactions of $25 or less is 10 percent per
  2 20 month, 7 percent per month for pawnbroking transactions over
  2 21 $25 but less than $100, and 5 percent per month for pawnbroking
  2 22 transactions of $100 or more.
  2 23    Pursuant to Code section 535.5, a person charged a higher
  2 24 rate of interest than these specified rates may obtain a court
  2 25 judgment to pay back only the principal amount of the debt
  2 26 without interest or costs. In addition, a pawnbroker found in
  2 27 violation forfeits 8 percent of the unpaid principal debt at
  2 28 the time of judgment.
  2 29    The bill provides several definitions relating to interest
  2 30 rates applicable to pawnbroking transactions. The bill defines
  2 31 a "pawnbroker" to mean any person who engages in the business
  2 32 of conducting pawnbroking transactions. The bill specifies a
  2 33 list of entities that are not included in the definition of
  2 34 "pawnbroker". The bill defines a "pawnbroking transaction" to
  2 35 mean any loan on the security of pledged goods or any purchase
  3  1 of pledged goods on the condition that the pledged goods are
  3  2 left with the pawnbroker and may be redeemed or repurchased by
  3  3 the seller for a fixed price within a fixed period of time.
  3  4 The bill defines "pledged goods" to mean tangible personal
  3  5 property other than securities, bank drafts, or printed
  3  6 evidence of indebtedness, that are purchased by, deposited
  3  7 with, or otherwise actually delivered into the possession of a
  3  8 pawnbroker in connection with a pawnbroking transaction.
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