Plain English Breakdown
The source material contains contradictory status information: one section states the bill passed and reached final enrollment, while another lists a canceled hearing as the last action.
AB-2558: New Interest Rate Limits on Small Loans and Check Cashing
This bill changes the rules for small loans under $2,500 and deferred deposit transactions by limiting fees to a specific federal annual percentage rate instead of current state limits.
What This Bill Does
- Prohibits lenders from charging more than an annual percentage rate set in specified federal laws as of January 1, 2026 for loans under $2,500.
- Replaces the current fee limit on deferred deposit transactions with a new cap based on federal regulations effective January 1, 2026.
- Makes it a crime to charge fees that exceed these new limits by expanding existing criminal provisions.
- States that no state reimbursement is required for local agencies regarding costs from this act.
Who It Names or Affects
- Finance lenders, brokers, and program administrators licensed under the California Financing Law who lend less than $2,500.
- Businesses offering deferred deposit transactions regulated by the CDDTL.
- Customers taking out loans of less than $2,500 or using deferred deposit services.
Terms To Know
- California Financing Law (CFL)
- The state law that regulates how finance lenders and brokers make consumer loans under $2,500.
- Deferred Deposit Transaction
- A type of short-term loan regulated by the CDDTL where fees are currently limited to 15% of the check amount.
- Annual Percentage Rate (APR)
- The yearly cost of borrowing money expressed as a percentage, which this bill uses from federal laws instead of state rates.
Limits and Unknowns
- The exact dollar amount or specific percentage for the new federal rate limit is not listed in the summary.
- While expanding crimes usually requires reimbursement, this bill states no reimbursement is required but does not explain the specified reason why.
- The official status shows conflicting information: it says the bill passed both chambers and reached final enrollment, yet also lists a canceled hearing.