BILL ANALYSIS Ó SB 285 Page 1 Date of Hearing: July 8, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 285 (Block) - As Amended June 4, 2015 ----------------------------------------------------------------- |Policy |Banking and Finance |Vote:|12 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- 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; SB 285 Page 2 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 SB 285 Page 3 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