1. (a) Maximum finance charges permitted; initial charge. A licensee under this chapter may lend any sum of money not exceeding seventy-five hundred dollars, excluding charges, and notwithstanding the fact that the loan may be repayable in substantially equal monthly installments, may contract for and receive finance charges not to exceed:

   1. (1) Loans Not Exceeding One Hundred Fifty Dollars. On loans with cash advance not exceeding one hundred fifty dollars, a charge not to exceed two dollars and fifty cents per month if contracted for in writing by the borrower, may be charged in lieu of interest, and such loans may be repaid in weekly payments, with four weeks constituting a month.

   2. (2) Loans Over One Hundred Fifty Dollars But Not Exceeding Two Thousand Dollars. On loans with a cash advance exceeding one hundred fifty dollars but not exceeding two thousand dollars, twenty-five dollars per one hundred dollars on that portion of the cash advance not exceeding six hundred dollars; eighteen dollars per one hundred dollars on that portion of the cash advance exceeding six hundred dollars but not exceeding one thousand dollars; and twelve dollars per one hundred dollars on that portion of the cash advance exceeding one thousand dollars but not exceeding two thousand dollars when the loan is made payable over a period of one year, and proportionately at those rates over a longer or shorter period of time.

      In addition to the finance charges authorized in subparagraphs (1) and (2) of this subsection (a), a licensee under this chapter may contract for and receive an initial charge in such an amount as may be agreed upon in writing with the borrower, but not to exceed seven percent of the cash advance or fifty-six dollars, whichever is the lesser, for the expenses including, but not limited to, any attorney's fees and broker's fees, then or theretofore incurred and the services then or theretofore rendered by the lender incident to the loan or the security therefor, such as investigating the moral and financial standing of the borrower, investigating the security, title and similar investigations and for closing the loan, including any and all expenses incurred or services rendered at the request of the borrower or on his behalf in connection with the loan. Such initial charge may not be contracted for and received on any renewal loan more often than once in a three-month period. Upon any loan made to the borrower of a sum in excess of the amount on which the initial charge may have been charged within the three-month period, then the initial charge may be contracted for and received on the excess. The initial charge on loans not exceeding one hundred fifty dollars is a one-time charge, not a per annum charge and is not subject to refund. The initial charge on loans in excess of one hundred fifty dollars is a one-time charge, not a per annum charge and shall be subject to refund upon prepayment of the loan. The amount of the refund or refund credit shall represent at least as great a proportion of the total charges as the sum of the periodical time balances after the date of the prepayment bears to the sum of all periodical time balances under the schedule of payments in the loan contract.

   3. (3) Loans Over Two Thousand But Not Over Seventy-Five Hundred Dollars. On loans with a cash advance exceeding two thousand dollars but not exceeding seventy-five hundred dollars, the finance charges authorized in subparagraphs (1) and (2) of this subsection (a) shall not be permitted on any part of the loan. On such loans a licensee under this chapter may contract for and receive finance charges not to exceed nine dollars per one hundred dollars of the cash advance, when the loan is made payable over a period of one year, and proportionately at that rate over a longer or shorter period.

      In addition to the finance charges authorized in subparagraph (3) of this subsection (a), a licensee under this chapter may contract for and receive an initial charge in such an amount as may be agreed upon in writing with the borrower, but not to exceed five percent of the cash advance or two hundred dollars, whichever is lesser, for the expenses including, but not limited to, any attorney's fees and broker's fees, then or theretofore incurred and the services then and theretofore rendered by the lender incident to the loan or the security therefor, such as investigating the morals and financial standing of the borrower, investigating the security, title and similar investigations and for closing the loan, including any and all expenses incurred or services rendered at the request of the borrower or on his behalf in connection with the loan. The initial charge may not be contracted for or received on any renewal loan made to the same borrower more often than once in a twelve-month period. Upon any loan made to the borrower of a sum in excess of the amount on which the initial charge may have been charged within the twelve-month period, then the initial charge may be contracted for and received on the excess. If a loan is renewed or financed after the expiration of the initial twelve-month period, the initial charge may not exceed two percent of the cash advance. The initial charge is a one-time charge, not a per annum charge and shall be subject to refund upon prepayment of the loan. The amount of the refund or refund credit shall represent at least as great a proportion of the total charges as the sum of the periodical time balances after the date of the prepayment bears to the sum of all periodical time balances under the schedule of payments in the loan contract.

2. (b) Installment payments and maximum term of loan contract. - The payments on any loan governed by this chapter shall be in substantially equal, consecutive monthly installments and shall be in an amount not less than ten dollars per month, exclusive of finance charges. The final installment shall mature within the time limits set out below:

   Cash advance of $1000 or less 24 1/2 months Cash advance of $1001 to $1500 36 1/2 months Cash advance of $1501 to $2000 48 1/2 months Cash advance of $2001 to $7500 60 1/2 months

3. (c) Payment prior to maturity. - Any balance to become payable under any loan contract made under the provisions of this chapter may be repaid in full prior to maturity. When such balance is so repaid before maturity, whether by payment in cash, a new loan, renewal or otherwise, the unearned portion of the charges shall be refunded or credited to the borrower. The amount of the refund or refund credit shall represent at least as great a proportion of the total charges as the sum of the periodical time balances after the date of the prepayment bears to the sum of all periodical time balances under the schedule of payments in the loan contract; provided, that if a loan is renewed or refinanced during the first ninety days of the loan contract period, the refund shall be on a pro rata basis.
4. (d) Splitting of loan prohibited. - No licensee shall induce or permit any person, nor any husband and wife, jointly or severally, to become obligated directly or contingently, or both, under more than one contract of loan at the same time, for the sole purpose of obtaining a higher rate of interest or greater charge than would otherwise be permitted by this chapter.
5. (e) Delinquent charge; penalties for excessive charges. In addition to the charges and fees provided for by this chapter, no further or other amount may be charged, contracted for, or received, directly or indirectly, except that a licensee, if agreed to in writing, may contract for, impose, and collect a delinquent charge of five cents for each full dollar of an installment that is delinquent for ten or more days. The charge may be imposed only once on each delinquent installment and, if a portion of an installment is delinquent, the delinquent charge may be imposed only once on that portion of the installment that is delinquent. A lender may contract for and receive a minimum delinquency charge of five dollars, even if the charge exceeds five percent of the unpaid amount of the installment. The restriction does not apply to official fees as defined in Section 37-1-301(17), or actual and reasonable attorney fees as determined by the court in which suit is filed and court costs incurred in the collection or to the actual and reasonable expenses of repossession, storing, and selling of property pledged as security on a contract in default, or insurance premiums or identifiable charges authorized by this chapter. If an amount in excess of the charges permitted by this chapter is charged, contracted for, or received, except as the result of an accidental or bona fide error, the contract of loan is void, and the licensee has no right to collect or receive any principal, interest, charge, or recompense. The licensee and its several members, officers, directors, and agents who participated in the violation are guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred and not less than two hundred dollars or imprisoned not less than thirty days nor more than six months.

6. (f) Deferment charge. - If, as of an installment due date, the payment date of all wholly unpaid installments is deferred one or more full months and the maturity of the contract is extended for a corresponding period, the licensee may charge and collect a deferment charge not exceeding one percent per month of the outstanding balance for each month of the deferment period, provided that two percent per month of the outstanding balance for each month of the deferment period may be charged on loans where the original cash advance is five hundred dollars or less. The deferment period is that period during which no payment is made or required by reason of such deferment, except that no deferment made pursuant to this subsection shall extend the maturity of any contract made under this chapter for more than two months during any twelve-months period. The deferment charge may be collected at the time of deferment or at any time thereafter. The portion of the charges contracted for under Section 34-29-140 (a) and (d) applicable to each deferred balance and installment period following the deferment period shall remain the same as that applicable to such balance and period under the original loan contract. No installment on which a delinquent charge has been collected, or on account of which any partial payment has been made, shall be deferred or included in the computation of the deferment charge. If a loan is prepaid in full during the deferment period, the borrower shall receive, in addition to the refund required under Section 34-29-140 (c), a refund of that portion of the deferment charge applicable to any unexpired full month or months of such deferment period.

   Provided, however, no deferment charge for a deferment of a period of one month or less shall exceed ten dollars.

7. (g) Charges not deducted in advance. - Finance charges and initial charges made under this chapter shall not be paid, deducted, or received in advance, but shall be added to the cash advance.
8. (h) Loans to purchase real estate prohibited. - A licensee shall not contract for or receive the charges authorized by this chapter, on any loan which is directly or indirectly for the purchase price of real estate or an interest therein and which is secured by a purchase money lien or interest therein; provided, that this paragraph shall not be construed to prohibit a licensee from taking a nonpurchase money lien, whether primary or secondary, on real estate as security for a loan made in compliance with this chapter, and contracting for or receiving on such loan the charges authorized by this chapter.
9. (i) In addition to all other charges authorized by this section, a licensee may charge and add to the gross note a maintenance fee of two dollars for each month for the term of the loan for each loan account. If the loan is prepaid, the maintenance fee must be refunded pro rata with the unexpired term of the loan and a part of a month must be treated like a full month.
10. (j) Change of Dollar Amounts. - The dollar amounts provided in subsections (a)(2) and (a)(3) of this section shall change from time to time in the manner provided by Section 37-1-109, except that the index for December, 1991, is the Reference Base Index for purposes of adjustments to the dollar amounts of this section. The Chairman of the State Board of Financial Institutions has the same powers and duties in regard to the adjustments to the dollar amounts of subsection (a)(2) of this section as does the Administrator of the Department of Consumer Affairs with adjustments to the dollar amounts required in Section 37-1-109.
11. (k) Dollar Limits on Renewals. A licensee under this chapter may not renew a loan more than one time during any fifteen-month period where the actual dollars given to the customer is less than ten percent of the net outstanding loan balance at the time of renewal.

HISTORY: 1962 Code Section 8-800.10; 1956 (49) 2052, 2967; 1957 (50) 339; 1966 (54) 2391; 1967 (55) 558; 1976 Act No. 686 Section 56; 1977 Act No. 137; 1980 Act No. 392, Sections 1, 2; 1986 Act No. 370, Section 1; 1991 Act No. 98, Sections 1, 2, eff May 30, 1991; 1995 Act No; 135, Sections 2, 3, eff January 1, 1996; 2001 Act No. 44, Section 1, eff May 29, 2001.

Effect of Amendment

The 1991 amendment in (a)(2) increased the maximum dollar amount of loans covered from not exceeding one thousand dollars to not exceeding two thousand dollars, and doubled all the dollar amounts of the cash advances or portions of cash advances referred to in the section; in the second paragraph of (a)(2) substituted fifty-six for twenty-eight dollars; in (a)(3) substituted two thousand dollars for one thousand dollars; added Subsection (j); and made grammatical changes.

The 1995 amendment, by Section 2, added subsection (k); and, by Section 3, revised subsection (a) to provide for limitations on loan renewals.

The 2001 amendment in subsection (e) changed "five or more days" to "ten or more days", inserted the sentence relating to contracting for a minimum delinquency charge of five dollars, and changed "Section 37-1-301(10)" to "Section 37-1-301(17)"; in subsection (i) increased the maximum maintenance fee from one dollar to two dollars for each month; and made language and punctuation changes throughout subsections (e) and (i).