Consumer loans are a common way for people to pay for personal expenses, like medical bills or home repairs. In Oklahoma, specific state laws govern these loans, affecting both lenders and borrowers. Understanding these regulations is helpful. This overview explains Oklahoma’s consumer loan rules and what you need to know.
Relevant Oklahoma Legal Definition
Oklahoma law, mainly the Uniform Consumer Credit Code (U3C) in Title 14A of the Oklahoma Statutes, defines a consumer loan. Under Section 3-104, a consumer loan is provided by a regular lender primarily for personal, family, or household expenses.1Justia Law. Oklahoma Statutes §14A-3-104 (2024) – Definition: "Consumer Loan"
The loan must be repayable in installments or include a finance charge. This definition also covers loans from a lender’s credit card and can include some refinanced debts if they meet the criteria. These rules determine which loans fall under Oklahoma’s consumer protection laws.
Scope of Covered Loan Transactions
The U3C outlines which loan transactions it covers. The loan’s principal amount is a key factor. A loan is a consumer loan if its principal is $66,000 or less (as of July 1, 2023, and adjusted for inflation).2Oklahoma Department of Consumer Credit. Uniform Consumer Credit Code Dollar Amount Adjustments Effective July 1, 2024 to June 30, 2025 This applies to loans for personal, family, or household use from a regular lender.
Loans secured by land can also be consumer loans, regardless of the amount, if their interest rate is above a certain level. This ensures high-cost real estate loans are covered. Both the loan amount and sometimes the credit cost determine if Oklahoma’s consumer credit laws apply.
Licensing and Compliance Obligations
Lenders regularly making consumer loans in Oklahoma must obtain a license from the Oklahoma Department of Consumer Credit. According to Title 14A, Section 3-502, individuals or companies cannot make supervised loans without being a supervised financial organization (like a bank) or having a license.3Justia Law. Oklahoma Statutes §14A-3-502 (2024) – Authority to Make Supervised Loans A supervised loan is a consumer loan with a finance charge above a certain annual percentage rate, so licensing is important for higher-cost lenders.
The application process reviews the applicant’s character, financial stability, and suitability for lending. Licensed lenders must keep accurate records of loan transactions for two years after the final account entry, as per Department rules.4Cornell Law School Legal Information Institute. Okla. Admin. Code § 160:45-7-1 – Record Retention They also submit annual reports and follow all U3C rules, including disclosures and prohibited practices. The Department conducts examinations to ensure compliance.
Interest Rate Caps and Other Restrictions
Oklahoma’s U3C sets limits on interest rates and charges to protect borrowers. For consumer loans that are not supervised loans, Title 14A, Section 3-201, caps the finance charge at a ten percent annual percentage rate.5Justia Law. Oklahoma Statutes §14A-3-201 (2024) – Loan Finance Charge for Consumer Loans Other Than Supervised Loans
Supervised loans, which need stricter licensing, can have higher rates under Title 14A, Section 3-508. This section details a tiered system for maximum finance charges. As of July 1, 2023, lenders could charge up to thirty percent per year on unpaid principal of $3,960 or less; twenty-one percent on the part exceeding $3,960 but not more than $13,200; and fifteen percent on the part exceeding $13,200.6Justia Law. Oklahoma Statutes §14A-3-508A (2024) – Loan Finance Charge for Supervised Loans These amounts are adjusted for inflation.
Oklahoma law also controls other loan terms. Lenders can pass on official fees, taxes, and reasonable charges for services like appraisals, but other fees are limited. The U3C sets rules for delinquency charges on late payments. For example, on a precomputed loan, a late fee for an installment over ten days late cannot be more than five percent of the unpaid amount or an adjusted dollar figure (recently $33.00).7Justia Law. Oklahoma Statutes §14A-3-203 (2024) – Delinquency Charges Borrowers can prepay consumer loans in full anytime without penalty (Title 14A, Section 3-209), preventing lenders from trapping borrowers with prepayment fees on most loans.8Justia Law. Oklahoma Statutes §14A-3-209 (2024) – Right to Prepay
Enforcement Mechanisms
The Administrator of the Department of Consumer Credit oversees Oklahoma’s consumer loan laws. The Administrator handles consumer complaints, starts investigations, and works with lenders for voluntary compliance.
A main enforcement method is examining licensed lenders. Under Title 14A, Section 3-506, the Administrator can inspect a licensee’s operations, loans, and records. Not cooperating can result in administrative action.
If violations occur, the Administrator can issue cease and desist orders (Title 14A, Section 6-108) after a notice and hearing to stop illegal practices.9Justia Law. Oklahoma Statutes §14A-6-108 (2024) – Administrative Enforcement Orders – Review For problems like unfair agreements or fraud, the Administrator can take civil action in court to get an injunction.
Borrower Protections
Oklahoma law offers several protections for consumer loan borrowers. One key safeguard is clear disclosure of loan terms. Before a consumer agrees to a loan, Title 14A, Section 3-302, requires lenders to provide clear written information about the annual percentage rate (APR), finance charge, amount financed, and payment schedule. This helps consumers understand costs and compare loans.
The U3C and federal laws limit aggressive debt collection. Oklahoma law also restricts wage garnishment for consumer credit judgments. Title 14A, Section 5-107, states that the maximum garnishment is the lesser of twenty-five percent of disposable weekly earnings, or the amount by which disposable earnings exceed thirty times the federal minimum hourly wage.10Justia Law. Oklahoma Statutes §14A-5-105 (2022) – Limitation on Garnishment
For loans secured by a borrower’s main home, Oklahoma law gives a right to cure a default. Borrowers have a period, often twenty days after notice, to pay overdue amounts and delinquency charges to restore the loan.
The law also protects against unconscionable agreements. Under Title 14A, Section 5-108, if a court finds a loan agreement or a clause unfair when made, it can refuse to enforce it, remove the unfair clause, or limit its effect. This considers things like extreme price differences or actions that take advantage of a borrower.