DFPI reaches agreement to terminate high yield loans that LoanMart will market for 21 months
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The Los Angeles-based company agrees not to market or service title loans at interest rates higher than those under the California Fair Access to Credit Act. permissible
SACRAMENTO – The California Department of Financial Protection and Innovation (DFPI) announced today that it will have less than $ 10,000 with Los Angeles-based Wheels Financial Group, Inc in California at rates greater than 36 percent for the next twenty-one months .
The agreement follows an investigation the department launched last year to determine whether the company circumvented California’s newly enacted interest rate caps by partnering with an out-of-state bank. LoanMart stopped marketing its high-yield loans in November 2020 while DFPI’s investigation of its partnership with Utah-based Capital Community Bank was pending.
“The DFPI is committed to ensuring that banks outside the state of California do not exploit,” said DFPI Commissioner Clothilde V. Hewlett. “The DFPI will continue to combat efforts to circumvent California’s Fair Access to Credit Act and will work closely with state and federal regulators to monitor and respond to practices that harm consumers.”
In 2019, California lawmakers passed the landmark Fair Access to Credit Act (AB 539), which capped interest rates on most government-licensed lender loans to around 36 percent. These interest rate caps came into effect on January 1, 2020. DFPI licenses and regulates lenders subject to the Fair Access to Credit Act and the California Financing Law, the law that provides the authority through which LoanMart previously made loans in California. The agreement stipulates that LoanMart may not provide loans through a state-approved banking partner until September 2023, unless there is an intervening change in law or regulation that would otherwise allow this.
In addition to regulating financial lenders and brokers, DFPI licenses and regulates financial products and services, including nationally recognized banks and credit unions, commodity and investment advisors, money brokers, the offering and sale of securities and franchises, broker-dealers, non-bank installment lenders, payday – Lenders, Mortgage Lenders and Service Providers, Student Loan Service Providers, Trust Companies, Property Assessed Clean Energy (PACE) Program Administrators, Collection Agencies, Rental Contractors, Credit Repair and Consumer Credit Bureaus, Debt Relief Firms, and more.