1. (1) Except as otherwise specifically provided, if a seller is required to give to a buyer a statement of the rate of the credit service charge he shall state the rate in terms of an annual percentage rate as defined in subsection (2) or in terms of a corresponding nominal annual percentage rate as defined in subsection (3), whichever is appropriate.

2. (2) "Annual percentage rate"

   1. (a) with respect to a consumer credit sale other than onemade pursuant to a revolving charge account, is either
   2. (i) that nominal annual percentage rate which, whenapplied to the unpaid balances of the amountfinanced calculated according to the actuarialmethod, will yield a sum equal to the amount ofthe credit service charge; or
   3. (ii) that rate determined by any method prescribed byrule by the Administrator as a method whichmaterially simplifies computation while retainingreasonable accuracy as compared with the ratedetermined pursuant to subparagraph (i);
   4. (b) with respect to a consumer credit sale made pursuant toa revolving charge account, is the quotient expressedas a percentage of the total credit service charge forthe period to which it related divided by the amountupon which the credit service charge for that period isbased, multiplied by the number of these periods in ayear.
3. (3) "Corresponding nominal annual percentage rate" is the percentage or percentages used to calculate the credit service charge for one billing cycle or other period pursuant to a revolving charge account multiplied by the number of billing cycles or periods in a year.
4. (4) If a seller is permitted to make the same credit service charge for all amounts financed within a specified range (subsection (5) of Section 14A-2-201) or for all balances within a specified range (subsection (2) of Section 14A-2-207), he shall state the annual percentage rate or corresponding nominal annual percentage rate, whichever is appropriate, as applied to the median amount of the range within which the actual amount financed or balance is included.

5. (5) A statement of rate complies with this part if it does not vary from the accurately computed rate by more than the following tolerances:

   1. (a) the annual percentage rate may be rounded to thenearest quarter of one percent (1/4 of 1%) or may fallwithin a tolerance not greater than one-eighth of onepercent (1/8 of 1%) more or less than the actual ratefor consumer credit sales payable in substantiallyequal installments when a seller determines the totalcredit service charge on the basis of a single add-on,discount, periodic, or other rate, and the rate isconverted into an annual percentage rate underprocedures prescribed by rule by the Administrator;
   2. (b) the Administrator may authorize by rule the use of ratetables or charts which may provide for the disclosureof annual percentage rates which vary from the ratedetermined in accordance with paragraph (a) by not morethan the tolerances the Administrator may allow; theAdministrator may not allow a tolerance greater thaneight percent (8%) of that rate except to simplifycompliance where irregular payments are involved; and
   3. (c) in case a seller determines the annual percentage ratein a manner other than as described in paragraph (a) or(b), the Administrator may authorize by rule otherreasonable tolerances.

Laws 1969, HB 1001, c. 352, § 2-304, emerg. eff. July 1, 1969; Amended by Laws 1982, SB 643, c. 335, § 15, eff. October 1, 1982.