Louisiana introduces Consumer Alternative Installment Loan Act

House Bill 513, introduced in Louisiana on April 4, 2025, aims to establish the Louisiana Consumer Alternative Installment Loan Act, a legislative measure designed to regulate consumer lending practices in the state. The bill seeks to provide a framework for alternative installment loans, defining key terms such as "applicable interest" and "precomputed consumer loan," while ensuring that lenders operate under a valid license as mandated by existing consumer credit laws.

A significant provision of the bill allows licensed lenders to charge a monthly loan finance charge with an annual percentage rate capped at 59% on unpaid balances for loans of $5,500 or less. This aspect has sparked debate among lawmakers and consumer advocacy groups, with concerns raised about the potential for predatory lending practices. Proponents argue that the bill offers necessary flexibility for lenders to provide credit to consumers who may not qualify for traditional loans, while opponents caution that the high-interest rates could lead to financial distress for borrowers.

The bill also outlines the administration and enforcement mechanisms, ensuring compliance with the Louisiana Consumer Credit Law. It specifies how payments should be applied to loans and what actions lenders must take when loans are paid off early, aiming to protect consumer rights and promote transparency in lending.

As the legislative session progresses, the implications of House Bill 513 could be far-reaching. If passed, it may reshape the landscape of consumer lending in Louisiana, potentially increasing access to credit for some while raising concerns about the affordability and sustainability of such loans for vulnerable populations. Stakeholders are closely monitoring the bill's progress, anticipating further discussions and possible amendments as it moves through the legislative process.