Alert

June 6, 2017

Nevada Imposes Additional Requirements on High-interest Lenders

Nevada has enacted a new law, A.B. 163, requiring high-interest lenders to conduct an ability to pay calculation, mandating that high-interest lenders offer extended payment plans for deferred deposit loans in certain circumstances, revising certain notice requirements, and revising the requirements for making title loans.

Chapter 604A of the Nevada Revised Statutes establishes standards for short-term, high interest loans. A.B. 163 states that a customer has the ability to repay the loan if the customer has a "reasonable ability" to repay the loan, as determined by the licensee after considering, to the extent available, the following underwriting factors:

• The current or reasonably expected income of the customer;
• The current employment status of the customer based on evidence including, without limitation, a pay stub or bank deposit;
• The credit history of the customer;
• The amount due under the original term of the loan, the monthly payment on the loan, if the loan is an installment loan, or the potential repayment plan if the customer defaults on the loan; and
• Other evidence, including, without limitation, bank statements, electronic bank statements and written representations to the licensee.

Prior to this bill's enactment, Chapter 604A allowed a lender to offer the customer a grace period following a default. A.B. 163 mandates that the lender offer a grace period if he or she has not entered into an extended payment plan for the deferred deposit loan during the immediately preceding 12-month period and requests an extended payment plan before the time the deferred deposit loan is due. Under the new law, a lender may not offer a grace period for the purpose of artificially increasing the amount a customer qualifies to borrow or condition the grace period on the customer's agreement to a new loan or a modification of the terms of an existing loan.

Existing law requires lenders to post a notice at their locations stating the fees they charge and regulator contact information for complaints. The new law requires a lender to also post a notice of the existing requirement that a lender offer a repayment plan to a customer who defaults on a loan before the lender commences a collection action.

A.B. 163 adds to the existing restrictions on title loans in Chapter 604A by specifying that the customer must legally own the vehicle that secures the loan and that the person making the loan cannot consider the income, except for the customer's community property, of anyone who is not a legal owner of the vehicle who enters into a loan agreement with the licensee when determining whether the customer has the ability to repay the loan.