Allows a lender to charge an origination fee, increase interest rates and collect a monthly service fee, on loans up to three hundred dollars ($300) but not exceeding five thousand dollars ($5,000).

Plain-English Summary

This bill would change the rules for small personal loans in Rhode Island, specifically for loans between $300 and $5,000. Under the proposed changes, lenders who offer these smaller loans would be allowed to charge borrowers three types of fees and costs: an upfront origination fee (a one-time charge when the loan is issued), higher interest rates than currently permitted, and a recurring monthly service fee for the life of the loan.

The bill primarily affects two groups: small loan lenders operating in Rhode Island and consumers who borrow smaller amounts of money — often people who need quick access to cash and may not qualify for traditional bank loans. Supporters of similar measures typically argue that allowing lenders to charge more makes it financially worthwhile for them to offer these smaller loans, potentially expanding access to credit. Critics of similar proposals often raise concerns that stacking multiple fees on top of higher interest rates can make these loans significantly more expensive for borrowers over time.

The bill has been introduced and sent to the Rhode Island Senate Commerce Committee, meaning it is in the early stages of the legislative process and has not yet been voted on. If passed, it would amend the existing state laws that govern small loan lenders and how much they can charge customers.