408.505. Term of loans, charges permitted, repayment, return check charge.
Term of loans, charges permitted, repayment, return check charge.
408.505. 1. This section shall apply to:
(1) Unsecured loans made by lenders licensed or who should have beenlicensed pursuant to section 408.500;
(2) Any person that the Missouri division of finance determines thathas entered into a transaction that, in substance, is a disguised loan; and
(3) Any person that the Missouri division of finance determines hasengaged in subterfuge for the purpose of avoiding the provisions of thissection.
2. All loans made pursuant to this section and section 408.500, shallhave a minimum term of fourteen days and a maximum term of thirty-one days,regardless of whether the loan is an original loan or renewed loan.
3. A lender may only charge simple interest and fees in accordancewith sections 408.100 and 408.140. No other charges of any nature shall bepermitted except as provided by this section, including any charges forcashing the loan proceeds if they are given in check form. However, noborrower shall be required to pay a total amount of accumulated interestand fees in excess of seventy-five percent of the initial loan amount onany single loan authorized pursuant to this section for the entire term ofthat loan and all renewals authorized by section 408.500 and this section.
4. A loan made pursuant to the provisions of section 408.500 and thissection shall be deemed completed and shall not be considered a renewedloan when the lender presents the instrument for payment or the payeeredeems the instrument by paying the full amount of the instrument to thelender. Once the payee has completed the loan, the payee may enter into anew loan with a lender.
5. Except as provided in subsection 3 of this section, no loan madepursuant to this section shall be repaid by the proceeds of another loanmade by the same lender or any person or entity affiliated with the lender.A lender, person or entity affiliated with the lender shall not have morethan five hundred dollars in loans made pursuant to section 408.500 andthis section outstanding to the same borrower at any one time. A lendercomplies with this subsection if:
(1) The consumer certifies in writing that the consumer does not haveany outstanding small loans with the lender which in the aggregate exceedsfive hundred dollars, and is not repaying the loan with the proceeds ofanother loan made by the same lender; and
(2) The lender does not know, or have reason to believe, that theconsumer's written certification is false.
6. On a consumer loan transaction where cash is advanced in exchangefor a personal check, a return check charge may be charged in the amountsprovided by sections 408.653 and 408.654, as applicable.
7. No state or public employee or official, including a judge of anycourt of this state, shall enforce the provisions of any contract forpayment of money subject to this section which violates the provisions ofsection 408.500 and this section.
8. A person does not commit the crime of passing a bad check pursuantto section 570.120, RSMo, if at the time the payee accepts a check orsimilar sight order for the payment of money, he or she does so with theunderstanding that the payee will not present it for payment until laterand the payee knows or has reason to believe that there are insufficientfunds on deposit with the drawee at the time of acceptance. However, thissection shall not apply if the person's account on which the instrument waswritten was closed by the consumer before the agreed-upon date ofnegotiation or the consumer has stopped payment on the check.
9. A lender shall not use a device or agreement that would have theeffect of charging or collecting more fees, charges, or interest thanallowed by this section, including, but not limited to:
(1) Entering into a different type of transaction;
(2) Entering into a sales lease back arrangement;
(3) Catalog sales;
(4) Entering into any other transaction with the consumer that isdesigned to evade the applicability of this section.
10. The provisions of this section shall only apply to entitiessubject to the provisions of section 408.500 and this section.
(L. 2002 S.B. 884)