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NEW MISSOURI PAYDAY LOAN LEGISLATIONThe laws governing payday loans (SB884) changed effective August 28, 2002. The changes require the use of revised contracts and effect renewals and other items highlighted below: A) There have been significant changes concerning renewals: 1) there must be a pay down of at least 5% of the original balance on each and every renewal beginning with the first renewal and 2) a loan may not be renewed more than 6 times. (408.500.6); Example: The borrower must reduce the principal of a $300 loan a minimum of $15 each time the loan is renewed. B) The minimum loan term is 14 days and the maximum term is 31 days. (408.505.2); C) Loans must still be simple interest and may be at any interest rate, but the maximum amount the borrower may pay in interest and fees for the life of a loan, including all its renewals, is 75% of the original loan amount. (408.505.3); Example: A lender could not collect more than $75, in total, on a $100 loan regardless of the number of times it has been renewed. Please Note: The law says interest and fees. NSF check fees, late charges, and loan origination fees (if any) would be included in the 75% ceiling. D) The lender may not charge the borrower a fee for cashing the lender's loan proceeds check. (408.505.3); E) Once the loan is "completed" by a cash payoff, or by the lender depositing the check into a depository financial institution, a subsequent loan does not constitute a renewal. (408.505.4); F) Except for a renewal, a loan cannot be repaid with the proceeds of a loan by the same lender. (408.505.5); G) A borrower may not have loans totaling more than $500 with a lender or any affiliated entity. (508.505.5); H) A lender may charge a returned heck fee of $20, plus the amount the bank charges the lender for handling the check (408.505.6) but giving an NSF check to a payday lender is not a crime unless the maker stopped payment or closed the account. (408.505.8).
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