408.500. Unsecured loans of five hundred dollars or less, licensure of lenders, interest rates and fees allowed--penalties for violations--cost of collection expenses--notice required, form.
Unsecured loans of five hundred dollars or less, licensure of lenders,interest rates and fees allowed--penalties for violations--costof collection expenses--notice required, form.
408.500. 1. Lenders, other than banks, trust companies, creditunions, savings banks and savings and loan companies, in the business ofmaking unsecured loans of five hundred dollars or less shall obtain alicense from the director of the division of finance. An annual licensefee of three hundred dollars per location shall be required. The licenseyear shall commence on January first each year and the license fee may beprorated for expired months. The director may establish a bienniallicensing arrangement but in no case shall the fees be payable for morethan one year at a time. The provisions of this section shall not apply topawnbroker loans, consumer credit loans as authorized under chapter 367,RSMo, nor to a check accepted and deposited or cashed by the payee businesson the same or the following business day. The disclosures required by thefederal Truth in Lending Act and regulation Z shall be provided on anyloan, renewal or extension made pursuant to this section and the loan,renewal or extension documents shall be signed by the borrower.
2. Entities making loans pursuant to this section shall contract forand receive simple interest and fees in accordance with sections 408.100and 408.140. Any contract evidencing any fee or charge of any kindwhatsoever, except for bona fide clerical errors, in violation of thissection shall be void. Any person, firm or corporation who receives orimposes a fee or charge in violation of this section shall be guilty of aclass A misdemeanor.
3. Notwithstanding any other law to the contrary, cost of collectionexpenses, which include court costs and reasonable attorneys fees, awardedby the court in suit to recover on a bad check or breach of contract shallnot be considered as a fee or charge for purposes of this section.
4. Lenders licensed pursuant to this section shall conspicuously postin the lobby of the office, in at least fourteen-point bold type, themaximum annual percentage rates such licensee is currently charging and thestatement:NOTICE:
This lender offers short-term loans. Please read and understand theterms of the loan agreement before signing.
5. The lender shall provide the borrower with a notice insubstantially the following form set forth in at least ten-point bold type,and receipt thereof shall be acknowledged by signature of the borrower:
(1) This lender offers short-term loans. Please read and understandthe terms of the loan agreement before signing.
(2) You may cancel this loan without costs by returning the fullprincipal balance to the lender by the close of the lender's next fullbusiness day.
6. The lender shall renew the loan upon the borrower's writtenrequest and the payment of any interest and fees due at the time of suchrenewal; however, upon the first renewal of the loan agreement, and eachsubsequent renewal thereafter, the borrower shall reduce the principalamount of the loan by not less than five percent of the original amount ofthe loan until such loan is paid in full. However, no loan may be renewedmore than six times.
7. When making or negotiating loans, a licensee shall consider thefinancial ability of the borrower to reasonably repay the loan in the timeand manner specified in the loan contract. All records shall be retainedat least two years.
8. A licensee who ceases business pursuant to this section mustnotify the director to request an examination of all records within tenbusiness days prior to cessation. All records must be retained at leasttwo years.
9. Any lender licensed pursuant to this section who fails, refuses orneglects to comply with the provisions of this section, or any lawsrelating to consumer loans or commits any criminal act may have its licensesuspended or revoked by the director of finance after a hearing before thedirector on an order of the director to show cause why such order ofsuspension or revocation should not be entered specifying the groundstherefor which shall be served on the licensee at least ten days prior tothe hearing.
10. Whenever it shall appear to the director that any lender licensedpursuant to this section is failing, refusing or neglecting to make a goodfaith effort to comply with the provisions of this section, or any lawsrelating to consumer loans, the director may issue an order to cease anddesist which order may be enforceable by a civil penalty of not more thanone thousand dollars per day for each day that the neglect, failure orrefusal shall continue. The penalty shall be assessed and collected by thedirector. In determining the amount of the penalty, the director shalltake into account the appropriateness of the penalty with respect to thegravity of the violation, the history of previous violations, and suchother matters as justice may require.
(L. 1990 H.B. 961, A.L. 1998 H.B. 1189, A.L. 2001 H.B. 738 merged with S.B. 186, A.L. 2002 S.B. 884, A.L. 2003 S.B. 346)