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