| (1) Generally. For a loan contract using the scheduled
installment earnings method or the true daily earnings method, a payment
must be applied to the borrower's account in the following order or,
at the authorized lender's option, under another method of applying
a payment that is more favorable to the borrower:
(A) the straight line allocation of the acquisition
charge using the original scheduled term of the loan based on the
proportional scheduled payment that was paid or scheduled to be paid;
(B) default charges authorized by Texas Finance Code, §342.257;
(C) return check fees authorized by Texas Business
and Commerce Code, §3.506;
(D) accrued interest authorized under this section;
and
(E) principal.
(2) Straight line allocation of acquisition charge.
(A) Definition. The acquisition charge per scheduled
installment payment will be allocated on a straight line basis. A
straight line basis is calculated by dividing the original amount
of the acquisition charge by the original term of the loan. The allocation
of the acquisition charge for the final payment may be adjusted to
account for any rounding adjustments.
(B) Example. If an authorized lender made a loan with
a cash advance of $1,000 that was payable in 10 equal scheduled installments
of $150 and had an acquisition charge of $100, the allocation of the
acquisition charge would be $10 per scheduled installment.
(C) True daily earnings method and partial payments.
On loan contracts using the true daily earnings method, an authorized
lender must consider the proportional percentage of the scheduled
payment that is made by the borrower when allocating the acquisition
charge. If the borrower in the example described in subparagraph (B)
of this paragraph made a payment in the amount of $75, the allocation
of the acquisition charge for this partial payment would be proportional
amount of $5 ($75 payment made by the borrower ÷ $150 scheduled
installment x $10 allocation per scheduled installment).
(D) Prepayment in full. The acquisition charge is fully
earned at the inception of the loan. Notwithstanding subparagraph
(A) of this paragraph, if a loan is prepaid in full, then the authorized
lender may collect the remaining amount of the acquisition charge
that has not been paid.
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| Source Note: The provisions of this §83.606 adopted to be effective November 7, 2013, 38 TexReg 7692; amended to be effective July 10, 2014, 39 TexReg 5142; amended to be effective November 8, 2018, 43 TexReg 7338 |
