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California Governor Gavin Newsom signed into law AB539, the Fair Access to Credit Act, in response to the growing epidemic of high-cost lending that is currently permitted under the California Financing Law(1). According to the most recent Department of Business Oversight report, over 55% of loans to consumers between $2,500 and $5,000 were being charged rates of 100% APR or higher (2). AB539's overwhelming and bipartisan support in this year's legislative session was a stunning rebuke of the high-cost lending lobbying efforts that had thwarted earlier attempts to implement more reasonable rates under the California Financing Law(3).
Co-authored by Assembly Banking Chair Monique Limon and Assembly Member Tim Grayson, both of whom were on hand to witness the Governor’s signing, the bill enjoyed a widespread and diverse coalition of supporters, along with the primary sponsor, the County of Los Angeles. In a statement released by County Supervisor Hilda Solis, who along with fellow Supervisor Kuehl have been leading the County's efforts to address high-cost lending, she expressed thanks to the broad coalition of local governments, community and faith-based organizations, and responsible lenders for their hard work in advancing the legislation(4).
Stated Bobby Aiken, CEO of Lendmark Financial Services, "We are very pleased to have assisted in this effort to bring both stability and clarity to California's consumer lending market. As a life event lender, whether planned or unplanned, we recognize the importance to consumers to have high quality credit that is both accessible and affordable. This action reinforces the importance of promoting the beneficial alignment of interests between borrowers and lenders."
The Bill, which will become effective January 1st, 2020, will place a maximum rate of 36%, plus the Federal Funds rate, on loans of $2,500 or more but less than $10,000 that under current law have no rate limitations. Other changes include a minimum loan term of 12 months to promote reasonable repayment schedules and a requirement that prior to disbursing loan proceeds credit score resources be provided to consumers to assist them in better understanding the importance of a credit score and how it can be improved.
In their AB539 support letter, Californians for Economic Justice, one of California’s leading advocacy coalitions of nonprofit community and faith-based organizations, stated that “AB539 will protect borrowers from the predatory practices of triple-digit lenders by enacting a reasonable interest rate cap on installment loans that allow lenders to make a fair return and give borrowers a fair chance to repay their loan.”(5)
Upon successful passage of the bill, Mr. Aiken added "At Lendmark, we will always seek to be on the right side of issues such as this. Access to credit should not be defined as credit at any cost. We congratulate Banking Chair Limon on her leadership for taking an important and balanced approach to a very complex and challenging problem. It is a measured and well thought out solution that will benefit borrowers throughout California and provide responsible lenders with both guidance and certainty in order to meet the State's growing consumer credit market needs."
(1) Governor Newsom Signs Legislation to Fight Predatory Lending in California (2) 2018 Annual Report of Operations of Finance Companies (3) High interest rate loans could soon be capped in California under plan approved by lawmakers (4) Supervisor Solis’ statement on Gov. Newsom signing AB539 (high cost loans) into law (5) Information on AB539
Headquartered in Lawrenceville Georgia, Lendmark Financial Services is a consumer finance company specializing in providing a variety of personal loans, automobile loans, and retail merchant sales finance services. Since its inception in 1996, Lendmark has experienced significant growth by following its original mission of meeting the personal lending needs of consumers for both planned and unplanned life events. Today, with 331 branches in 19 states from coast to coast, Lendmark continues to expand as the financial services organization of choice for its customers and retail business partners by providing superior, consistent, and reliable services with every transaction. For more information, visit www.lendmarkfinancial.com.
Contact: Chris McKinley, SVP Government Affairs Telephone: 336-263-6992 Email: firstname.lastname@example.org
An estate tax is imposed on transfers of assets after death, while a gift tax is on asset transfers during life. Federal law dictates amounts and exemptions, while many states have also opted to impose an estate or inheritance tax. Estate tax is typically only imposed on a higher-value estate, but be aware as your assets can add up quickly. Also note, if your heirs opt to sell off your property or business at a profit, they may incur a capital gains tax.
A tax advisor will be able to guide you through the current tax laws, so you can best allocate your estate to your heirs. For more valuable information on estate taxation, please review the following links:
Contrary to common misconception, a will and a living trust are not the same. Put simply, a will covers your medical wishes, directives and power of attorney, while a living trust deals with your financial affairs and assets. A thorough estate plan contains both legal documents, but you should understand the purpose and the possible limitations of each.
Living trusts may be more appropriate for individuals of a more advanced age who have built a certain amount of wealth, while a will is something most adults should have in place. Understand, even if you allocate assets through a will, the assets will still have to go through probate—a legal process to validate your will—whereas with a living trust that process could be avoided.
Please click on the following links for more information about these important documents and their nuances.