Texas Adopts Model Plain Language Contract Clauses for Consumer Installment Loans Not Secured by Real Property

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The Finance Commission of Texas recently adopted amendments to its Rules implementing the Texas Finance Code’s plain language requirements, adding model plain language contract clauses for use with transactions in which a lender finances the administrative fee for a consumer installment loan that is not secured by real property.  The amendments took effect on March 8, 2018.

Prior to amendment, the Rules provided model clauses only for consumer installment loan transactions that are not secured by real property in which the administrative fee was either paid in cash or not included in the cash advance on which interest was computed.  As amended, the Rules, while retaining the aforementioned model clauses (with updated rate bracket amounts), now also provide model plain language contract clauses for use in instances where a lender finances the administrative fee for such transactions.  The new model clauses contain, among other things, a statement of the cash advance amount to ensure that the contract discloses the specific amount on which interest will be computed.

A copy of the amendments is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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