BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 285  


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          Date of Hearing:  July 8, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 285  
          (Block) - As Amended June 4, 2015


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          |Policy       |Banking and Finance            |Vote:|12 - 0       |
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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill increases the maximum rates and fees that pawnbrokers  
          may charge on loans; simplifies the rate and fee structure for  
          pawnbroker loans, and allows pawnbrokers to deliver, at the  
          option of the pledgor, certain notices by email.  Specifically,  
          this bill:


          1)Increases the loan setup fee from 2.0% to 3.0% of the loan,  
            and increases the maximum loan setup fee from $10.00 to  
            $30.00;









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          2)Increases the maximum amounts that may be charged during the  
            first 3 months of any loan, including a maximum charge of 9.0%  
            for loans of $175.00 up to $2,499.99 (the maximum loan), and  
            consolidates the maximum 3-month charge amounts to 6 loan  
            brackets from 21;


          3)Increases the maximum amount that may be charged after the  
            first 3 months from 2.5% to 3.0% of the remaining unpaid  
            principal of the loan per month; and


          4)Includes a new $1.00 storage and handling charge for articles  
            that can be contained within one cubic foot.


          FISCAL EFFECT:


          Insignificant additional enforcement costs to the Department of  
          Justice.


          COMMENTS:


          Purpose.  According to the author, this bill helps sustain the  
          long-term viability of the pawn industry in California.  Pawn  
          lending rates and fees are established in statute and have been  
          increased periodically to adjust for increases in business  
          costs, the last having occurred in 2011.


          According to the California Pawnbroker's Association (CAPA),  
          California interest rates and fee caps are among the lowest in  
          the United States, ranking 48th out of 51 states and the  
          District of Columbia.  Rising business costs and the high cost  
          of living in California have reduced pawnbroking margins, and  








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          CAPA contends even with the increases proposed in this bill,  
          California interest rates and fee caps will remain among the  
          cheapest in the country.








          Analysis Prepared by:Joel Tashjian / APPR. / (916)  
          319-2081