This rate should be reconsidered after a reasonable period of experience with it. In (fathers a lower rate would probably be impracticable, and a careful study of the question might produce evidence in favor of an increase in the initial rate. The evidence available at present leads us to believe that 2i per cent a month, ap- plying to all contracts, is the lowest maximum rate which would be effective under the most favorable conditions, and that this rate is too low to be effective in most states.
But in Missouri a Iowa borrow money online similar maximum is clearly inadequate and unlicensed high-rate lending in sums of less that vlOO is prevalent. It seems probable that reductions below the initial maximum recommended here would be found to be gen- erally possible in the northern industrial states, while reductions below the initial rate would probably prove to be generally undesirable in southern and western states where urban areas are distant from each other and the existing demand is for relatively small loans. The relationship between the possibility of Iowa borrow money online lower max- imum interest rates and the vigilant and aggressive exercise by the supervising officer of the descre tionary powers granted by the -fifth and Sixth Drafts should be clearly recognized. Without the discretionary powers granted by the Fifth and Sixth Drafts of the Uniform Law and without forceful admin- istration of the Act, it would probably be unwise to attempt reduction below the 3 and Zrk per cent a month maximum rates now in effect in most states. The general recommendation of a graduated rate is a departure from the previous policy of the Department of Remedial Loans. Heretofore the Department has consistently recommended a flat maximum rate applying to all contracts. It was anticipated that competition would reduce the going rate for the most profitable loans and that this competition would be most effective if the maximum charge were expressed as a single rate. The graduated rate has been recommended in spite of these advantages of the flat rate rather than because they no longer exist. First, thegreater profitableness of larger loans has led to a vig- orous competition for such loans to the neglect, although Iowa borrow money online not to the exclusion, of loans of small sums. Because of this neglect of the smaller loans by licensed lenders, unlicensed lenders have frequently been able to build up a business in very small loans at exorbitant rates.
We believe the graduated rate will tend to encourage the making of smaller loans by licensed lenders, and to prevent unlicensed lending in these sums. Second, although competition has succeeded in reducing rates of interest on larger loans in many communities, the maximum rate has continued to prevail in others. There is a tendency for excessive competition in increasecos ts of lend- ing, and consequently to restrain competitive rate reductions. Third, the interest burden in dollars upon borrowers of large sums is high, while it is not considered socially desirable that very small loans should bear their full share of operat- ing costs, it has seemed proper to provide a less inequitable distribution of these costs than was possible under a flat maximum rate, Note 14a.
This paragraph is necessary only when a grad- uated rate is used, and may require modification to meet local conditions in some states. This section should be modified for use in certain states in which 13c ensees under the existing small loan act are engaged in the business of financing the liquid- ation of accounts receivable of retail merchants and profess- ional men. In these Instances it is recommended that this practice be permitted in the discretion and with the specific approval of the supervising officer.
It may also be necessaryto add a paragraph attaching a criminal penalty for failure of the licensee (or others) to submit to subpoena, produce documents, make reports, etc.
In this section insert the appropriate paragraphs if it is desired to create a new department or subdivision or official, providing for revenues and disbursements, defining new duties, etc. All general rules and regulations and all denials, revocations, and suspensions of licensed should be re- quired to have the written approval of the head of the principal department if a subdepartment administers this Act. This section should prescribe the procedure for judicial review of all discretionary acts of the Commissioner which might be open to the construction that they are exercises of judicial powers, including all findings, decisions, and determinations and the application of all rules and regula tions by demands or requirements made upon licensees. In Sections 4 and 9 general provisions are made for the right of review in the specific cases covered by such sections. In Section 24 corresponding provisions should be made to cover all other cases. In addition, if required In any State, the specific procedure for all cases should be provided for in appropriate detail. The last paragraphs of Sections 4 and 9 may have to be redrafted to bring them into accord with Section 24 as to procedure. Where the judicial code does not specifically so provide, provision should be made that review is by the State court of general, original jurisdiction. If a greater number of affirmative votes is required to pass an act effective immediately, this section should be changer! Licenses for Business of Making Small Loans For Penalty, see Sec. No person shall directly or indirectly engage in the business of making loans of three hu dred dollars or less, if the amount to be paid on any such loan for interest and expenses exceeds in the aggregate an amount equivalent to twelve per cent per annum upon the sum loaned, without first obtaining from the commissioner of banks, in sections ninety- six to one hundred and fourteen, inclusive, called the com- missioner, a license to carry on the said business in the town where the business is to be transacted. When an application for a loan or for an endorsement or guarantee or for thepurcha. They buying or endorsing of notes or the furnish- ing of guarantee or security for compensation shall be considered to be engaging in Iowa borrow money online the business of making small loans within said sections. In prosecutions under said sections, the amount to be paid upon any loan of Iowa borrow money online three hundred dollars or 1 ss for interest or expenses shall include all sums paid or to be paid by or on behalf of the borrower for interest, brokerage, recording fees, commissions, services extension of loan, forbearance to enforce payment, and all other sums charged against or paid or to be paid by the borrower for making or securing directly or indirectly the loan, and shall include all such sums when paid by or on behalf of or charged against the borrower for or on accou t of making or securing the loan, directly or indirectly, to or by any person, other than the lender, if such payment or charge was known to the lender at the time of making the loan, or might have been ascertained by reasonable inquiry.