LRB-2597/1
MDK:jld:rs
2005 - 2006 LEGISLATURE
June 9, 2005 - Introduced by Senators Hansen, Erpenbach, Lassa, Taylor and
Jauch, cosponsored by Representatives
Seidel, Sheridan, Gielow, Ainsworth,
Grigsby, Berceau and
Young. Referred to Committee on Housing and
Financial Institutions.
SB236,1,2
1An Act to amend 138.09 (1m) (a); and
to create 138.09 (8) (f) and 138.15 of the
2statutes;
relating to: interest and fees for motor vehicle title loans.
Analysis by the Legislative Reference Bureau
Under current law, a lender other than a bank, savings bank, savings and loan
association, or credit union must obtain a license from the Division of Banking in the
Department of Financial Institutions (DFI) to assess a finance charge greater than
18 percent. With certain limited exceptions, current law provides no maximum
finance charge on a loan made by such a lender.
This bill imposes a maximum finance charge on a "motor vehicle title loan"
made in the ordinary course of business by such a lender. The bill defines a motor
vehicle title loan as a loan secured by a nonpurchase money security interest in the
borrower's motor vehicle. Under the bill, a person, other than a bank, savings bank,
savings and loan association, or credit union, who makes such a loan may not assess
fees or interest for a loan that, in the aggregate, exceed 5 percent of the amount of
the loan. Also, such a person cannot make such a loan unless the person is licensed
by DFI.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB236, s. 1
1Section
1. 138.09 (1m) (a) of the statutes is amended to read:
SB236,2,132
138.09
(1m) (a) Before any person may do business under this section
or s.
3138.15 or charge the interest authorized by sub. (7) and before any creditor other
4than a bank, savings bank, savings and loan association or credit union may assess
5a finance charge on a consumer loan in excess of 18% per year, that person shall first
6obtain a license from the division. Applications for a license shall be in writing and
7upon forms provided for this purpose by the division. An applicant at the time of
8making an application shall pay to the division a nonrefundable $300 fee for
9investigating the application and a $500 annual license fee for the period
10terminating on the last day of the current calendar year. If the cost of the
11investigation exceeds $300, the applicant shall upon demand of the division pay to
12the division the amount by which the cost of the investigation exceeds the
13nonrefundable fee.
SB236, s. 2
14Section
2. 138.09 (8) (f) of the statutes is created to read:
SB236,2,1615
138.09
(8) (f) When making a motor vehicle title loan, as defined in s. 138.15
16(1) (a), comply with s. 138.15.
SB236, s. 3
17Section
3. 138.15 of the statutes is created to read:
SB236,2,18
18138.15 Motor vehicle title loans. (1) Definitions. In this section:
SB236,2,2119
(a) "Motor vehicle title loan" means a loan obtained for personal, family, or
20household purposes that is secured by an interest, other than a purchase money
21security interest, in the borrower's motor vehicle.
SB236,2,2422
(b) "Motor vehicle title loan provider" means a person, other than a bank,
23savings bank, savings and loan association, or credit union, who makes motor vehicle
24title loans in the ordinary course of business.
SB236,3,4
1(2) Maximum fees and interest. Notwithstanding ss. 138.09 and 422.201, no
2motor vehicle title loan provider may charge, contract for, or receive fees and interest
3for a motor vehicle title loan that, in the aggregate, exceed 5 percent of the amount
4of the motor vehicle title loan.
SB236,3,76
(1) This act first applies to motor vehicle title loans made on the effective date
7of this subsection.
