Establishes a maximum per annum rate of interest on small loans at ninety-nine percent (99%) and limit the amounts of origination and closing fees. Also requires that late fees and returned payment fees be agreed to in writing between borrower and lender.

Rhode Island Small Loan Interest Rate Cap Bill

This bill would set new rules for small loans made in Rhode Island. Specifically, it would cap the annual interest rate on small loans at 99%, meaning lenders could not charge borrowers more than 99% interest per year. The bill would also place limits on origination fees (fees charged when a loan is first made) and closing fees, preventing lenders from adding excessive upfront costs on top of the interest rate.

The bill also addresses additional fees that sometimes come up during a loan. It would require that any late payment fees or returned payment fees (such as fees for a bounced check) must be formally agreed to in writing between the borrower and the lender before they can be charged. This is meant to make sure borrowers are clearly aware of these potential costs before taking on a loan.

This legislation would primarily affect people who take out small, short-term loans — often called payday loans or personal loans — as well as the businesses that provide them. These types of loans are frequently used by people who need quick access to cash and may not qualify for traditional bank loans. Current Rhode Island law allows interest rates on small loans that can be significantly higher than 99%, so this bill would represent a reduction in the maximum allowable rate.

It is worth noting that this bill was withdrawn at the sponsor's request, meaning it did not move forward in the legislative process and is not currently active. It was originally introduced and referred to the House Corporations Committee before being pulled back.