| (a) Regular transactions.
(1) If prepayment in full is made by cash, renewal,
or otherwise, the authorized lender must refund or credit to the borrower
the unearned interest by the refund method authorized by §83.751
of this title (relating to Scope) and identified in the loan agreement
as the chosen refund method. One day earned into a month will allow
the lender to earn the interest applicable to the full month.
(2) If prepayment in full is made by cash, renewal,
or otherwise, before the first installment due date, the authorized
lender must compute the refund as provided by this paragraph.
(A) If the first installment due date is 15 days or
less from the date of the loan, the lender may retain for each elapsed
day between the date of the loan and prepayment before the first installment
due date, 1/30th of the interest that could be retained if the first
installment period were one month and the loan was prepaid in full
on the first installment due date. All interest in excess of such
amount must be refunded or credited to the borrower.
(B) If the first installment due date is 16 days or
greater, but less than one month from the date of the loan, the lender
may retain for each elapsed day between the date of the loan and prepayment
before the first installment due date, 1/30th of the interest which
could be retained if the first installment period were one month and
the loan was prepaid in full on the first installment due date.
(C) If the first installment due date is more than
one month from the contract date, the lender may retain for each elapsed
day between the date of the loan and prepayment, 1/30th of the interest
which could be retained if the first installment period were one month
and the loan was prepaid in full on the first installment due date.
The daily charge is multiplied by the number of elapsed days up until
the first installment due date.
(b) Irregular transactions or transactions with term
greater than 60 months.
(1) If prepayment in full is made by cash, renewal,
or otherwise, after the first installment due date, the authorized
lender must refund or credit to the borrower the unearned interest
by the refund method authorized by §83.751 of this title and
identified in the loan agreement as the chosen refund method. The
amount of interest which may be retained by the lender as earned must
be determined by use of the scheduled installment earnings method
as authorized by Texas Finance Code, §342.352. If prepayment
in full or demand for payment in full occurs during an installment
period, the lender may retain an interest charge for previous elapsed
periods and the number of days beginning after the installment due
date and ending on the date of the prepayment or demand in full.
(2) If prepayment is made in full before the first
installment due date, an authorized lender may retain an interest
charge for each elapsed day between the date of the loan and the date
of prepayment. The interest charge may not exceed the amount of interest
allowed under the true daily earnings method for the same time period.
(c) Consideration of deferment charges for interest
refund calculations. To calculate the amount of the refund of unearned
interest, an authorized lender must consider any installments that
were deferred.
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| Source Note: The provisions of this §83.754 adopted to be effective November 9, 2006, 31 TexReg 8999; amended to be effective November 4, 2010, 35 TexReg 9698; amended to be effective July 10, 2014, 39 TexReg 5142 |
