| downpayment must be included in the Total of Payments. The
model clause regarding deferred downpayments reads:
Attached Graphic
(11) Required physical damage insurance. The creditor
may choose to omit the statement of the retail buyer's right to obtain
substitute coverage from another source. The model clause regarding
required physical damage insurance reads:
Attached Graphic
(12) Optional insurance coverages and debt cancellation
agreement.
(A) The model clause regarding optional insurance coverages
and debt cancellation agreement reads:
Attached Graphic
(B) A retail seller at its option may create a separate
disclosure for the authorization of the debt cancellation agreement.
(13) Optional credit life and accident and health insurance.
The model clause regarding optional credit life and accident and health
insurance reads:
Attached Graphic
(14) Liability insurance. If liability insurance coverage
is not included in the contract, any of the following notices are
sufficient to satisfy the requirements of Texas Finance Code, §348.205
if printed in a size equal to at least 10-point type that is boldfaced,
capitalized, underlined, or otherwise set out from surrounding written
material so as to be conspicuous:
(A) "THIS CONTRACT DOES NOT INCLUDE INSURANCE COVERAGE
FOR PERSONAL LIABILITY AND PROPERTY DAMAGE CAUSED TO OTHERS."
(B) "UNLESS A CHARGE FOR LIABILITY INSURANCE IS INCLUDED
IN THE ITEMIZATION OF AMOUNT FINANCED, LIABILITY INSURANCE COVERAGE
FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO OTHERS IS NOT INCLUDED
IN THIS CONTRACT."
(C) "UNLESS A CHARGE FOR LIABILITY INSURANCE IS INCLUDED
IN THE ITEMIZATION OF AMOUNT FINANCED, ANY INSURANCE REFERRED TO IN
THIS CONTRACT DOES NOT INCLUDE COVERAGE FOR PERSONAL LIABILITY AND
PROPERTY DAMAGE CAUSED TO OTHERS."
(15) Prohibition against oral modifications. The contract
may include a provision barring oral modifications of the contract.
A unilateral change to a contract may nevertheless occur as prescribed
by the procedures in Texas Finance Code, Chapter 349, Subchapter C.
The model clause regarding prohibition against oral modifications
reads:
Attached Graphic
(16) Finance charge earnings methods:
(A) Regular transaction using sum of the periodic balances
method.
(i) Sales tax advance. At the creditor's option a creditor
may choose one of the following model clauses regarding sales tax
advance:
(I) "You figure the Finance Charge using the add-on
method as defined by the Texas Finance Commission Rule. Add-on Finance
Charge is calculated on the full amount of the unpaid principal balance
and added as a lump sum to the unpaid principal balance for the full
term of the contract." Or
(II) "The Finance Charge will be calculated by using
the add-on method. Add-on Finance Charge is calculated on the full
amount of the unpaid principal balance and added as a lump sum to
the unpaid principal balance for the full term of the contract. The
add-on Finance Charge is calculated at a rate of $____ per $100.00
per year. This rate is not the same as the Annual Percentage Rate."
(ii) Deferred sales tax. The model clause regarding
deferred sales tax reads: "The Finance Charge will be calculated by
using the add-on method. Add-on Finance Charge is calculated on the
full amount of the unpaid principal balance subject to a finance charge
and added as a lump sum to the unpaid principal balance subject to
a Finance Charge for the full term of the contract. The add-on Finance
Charge is calculated at a rate of $____ per $100.00 per year. This
rate is not the same as the Annual Percentage Rate."
(B) True daily earnings method.
(i) Sales tax advance. At the creditor's option a creditor
may choose one of the following model clauses regarding sales tax
advance:
(I) "You figure the Finance Charge using the true daily
earnings method as defined by the Texas Finance Code. Under the true
daily earnings method, the Finance Charge will be figured by applying
the daily rate to the unpaid portion of the Amount Financed for the
number of days the unpaid portion of the Amount Financed is outstanding.
The daily rate is 1/365th of the Annual Percentage Rate. The unpaid
portion of the Amount Financed does not include late charges or returned
check charges." Or
(II) If a retail seller requires a retail buyer to
purchase credit life or credit accident and health insurance and the
sales tax is not deferred, the contract rate disclosure should read:
"The contract rate is _____%. This contract rate may not be the same
as the Annual Percentage Rate. You will figure the Finance Charge
by applying the true daily earnings method as defined by the Texas
Finance Code to the unpaid portion of the principal balance. The daily
rate is 1/365th of the contract rate. The unpaid principal balance
does not include the late charges or returned check charges."
(ii) Deferred sales tax: If sales tax is deferred,
the contract rate disclosure should read: "The contract rate is _____%.
This contract rate may not be the same as the Annual Percentage Rate.
You will figure the Finance Charge by applying the true daily earnings
method as defined by the Texas Finance Code to the unpaid portion
of the principal balance subject to a Finance Charge. The daily rate
is 1/365th of the contract rate. The unpaid principal balance subject
to a finance charge does not include the late charges, sales tax,
or returned check charges."
(C) Scheduled installment earnings method.
(i) Sales tax advance. At the creditor's option a creditor
may choose one of the following model clauses regarding sales tax
advance:
(I) "You figure the Finance Charge using the scheduled
installment earnings method as defined by the Texas Finance Code.
Under the scheduled installment earnings method, the Finance Charge
is figured by applying the daily rate to the unpaid portion of the
Amount Financed as if each payment will be made on its scheduled payment
date. The daily rate is 1/365th of the Annual Percentage Rate. The
unpaid portion of the Amount Financed does not include late charges
or returned check charges." Or
(II) If sales tax is advanced, and the retail seller
either discloses the annual percentage rate using a method other than
a 365/365 basis or requires a retail buyer to purchase credit life
or credit accident and health insurance, then the contract rate disclosure
should read: "The contract rate is _____%. This contract rate may
not be the same as the Annual Percentage Rate. You will figure the
Finance Charge by applying the scheduled installment earnings method
as defined by the Texas Finance Code to the unpaid portion of the
principal balance. You based the Finance Charge, Total of Payments,
and Total Sale Price as if all payments were made as scheduled. The
unpaid principal balance does not include the late charges or returned
check charges."
(ii) Deferred sales tax. If sales tax is deferred,
the contract rate disclosure should read: "The contract rate is _____%.
This contract rate may not be the same as the Annual Percentage Rate.
You figured the Finance Charge by applying the scheduled installment
earnings method as defined by the Texas Finance Code to the unpaid
portion of the principal balance subject to a Finance Charge. You
based the Finance Charge, Total of Payments, and Total Sale Price
as if all payments were made as scheduled. The unpaid principal balance
subject to a Finance Charge does not include the late charges, sales
tax, or returned check charges."
(17) Consumer warning. The following notices satisfy
the requirements of Texas Finance Code §348.102(d) if printed
in at least 10-point type that is boldfaced, capitalized, underlined,
or otherwise set out from surrounding written material so as to be
conspicuous.
(A) For contracts using the sum of the periodic balances
method (Rule of 78s) or the scheduled installment earnings method,
the notice may read:
(i) "NOTICE TO THE BUYER--I WILL NOT SIGN THIS CONTRACT
BEFORE I READ IT OR IF IT CONTAINS ANY BLANK SPACES. I AM ENTITLED
TO A COPY OF THE CONTRACT I SIGN. UNDER THE LAW, I HAVE THE RIGHT
TO PAY OFF IN ADVANCE ALL THAT I OWE AND UNDER CERTAIN CONDITIONS
MAY OBTAIN A PARTIAL REFUND OF THE FINANCE CHARGE. I WILL KEEP THIS
CONTRACT TO PROTECT MY LEGAL RIGHTS." Or
(ii) "NOTICE TO THE BUYER--THE BUYER SHOULD NOT SIGN
THIS CONTRACT BEFORE READING IT OR IF IT CONTAINS ANY BLANK SPACES.
THE BUYER IS ENTITLED TO A COPY OF THE SIGNED CONTRACT. UNDER THE
LAW, THE BUYER HAS THE RIGHT TO PAY OFF IN ADVANCE ALL THAT THE BUYER
OWES AND UNDER CERTAIN CONDITIONS MAY OBTAIN A PARTIAL REFUND OF THE
FINANCE CHARGE. THE BUYER SHOULD KEEP THIS CONTRACT TO PROTECT ITS
LEGAL RIGHTS."
Cont'd... |
