| (a) Precomputed retail installment sales contracts.
A retail installment sales contract may not contain a time price differential
charge that exceeds both the add-on rates authorized by Texas Finance
Code, §348.104 and the alternative simple time price differential
rate authorized by Texas Finance Code, §348.105 as calculated
by the add-on method or scheduled installment earnings method. A retail
installment sales contract may be in compliance with either statutory
rate specified in this subsection. Prepaid time price differential
in the form of points is not permitted.
(b) Time price differential-bearing retail installment
sales contracts. A retail installment sales contract may not contain
a time price differential charge that exceeds both the maximum annualized
daily rate authorized by Texas Finance Code, §348.104 and the
alternative simple time price differential rate authorized by Texas
Finance Code, §348.105 as calculated by the true daily earnings
method. A retail installment sales contract may be in compliance with
either statutory rate specified in this subsection. Prepaid time price
differential in the form of points is not permitted.
(c) Minimum time price differential. In lieu of the
time price differential charge specified under subsections (a) and
(b), a retail seller may charge a minimum time price differential
charge of $25.
(d) Method of calculation.
(1) Regular payment contract using sum of the periodic
balances method. The time price differential charge is computed using
the add-on rates authorized by Texas Finance Code, §348.104 or
the alternative time price differential rate authorized by Texas Finance
Code, §348.105 converted to an equivalent add-on rate per $100
per annum.
(A) Base time price differential charge. The base time
price differential charge is determined by multiplying the principal
balance subject to a finance charge, as defined by §84.102(14)
of this title (regarding Definitions), by the applicable add-on rate
per $100 per year for the corresponding term of the contract. If the
retail installment contract is payable for a period that is shorter
or longer than a year or is for an amount that is less or greater
than $100, the amount of the time price differential charge is decreased
or increased proportionately.
(B) Add-on rates. The applicable add-on rate per $100
per year is determined by the model year designated by the manufacturer
of the vehicle.
(C) Deferred sales tax. For usury purposes, the deferred
sales tax is allocated on a straight line basis. A straight line basis
is calculated by dividing the original gross deferred sales tax amount
by the original term of the contract. The allocation of the deferred
sales tax for the final payment must be adjusted for any rounding
differences. The payment amount disclosed on the retail installment
sales contract must include the straight line allocation of the deferred
sales tax per installment.
(D) Conversion of the alternative time price differential
rate to an add-on rate per $100 per annum. If the maximum time price
differential rate is the rate specified by Texas Finance Code, §348.105,
the maximum add-on rate per $100 per annum cannot exceed the add-on
rate contained in Figure: 7 TAC §84.201(d)(1)(D). The add-on
rate per $100 per annum is determined by converting the current maximum
alternative rate authorized by Texas Finance Code, §348.105 to
an equivalent add-on rate for the given monthly term of the contract.
The alternative simple time price differential rate authorized by
Texas Finance Code, §348.105 displayed as an example in Figure:
7 TAC §84.201(d)(1)(D) is 18% per annum. If the alternative simple
time price differential rate is adjusted according to Texas Finance
Code, Chapter 303 and is greater than 18% per annum, the add-on rates
shown in Figure: 7 TAC §84.201(d)(1)(D) should be adjusted accordingly.
Attached Graphic
(2) Scheduled installment earnings method. The scheduled
installment earnings method can be used for both regular and irregular
payment contracts.
(A) Maximum time price differential. The maximum time
price differential charge is computed by applying the applicable maximum
daily rate to the unpaid principal balance subject to a finance charge,
as defined by §84.102(14) of this title, as if each payment will
be made on its scheduled installment date. A payment received before
or after the due date does not affect the amount of the scheduled
reduction in the unpaid principal subject to a finance charge. The
computation of the time price differential must comply with the U.S.
Rule as defined by §84.102(22) of this title.
(B) Maximum annualized daily rate.
(i) Sales tax advanced transactions. On sales tax advanced
transactions using the scheduled installment earnings method, the
annualized daily rate is either:
(I) the annual percentage rate disclosed on the retail
installment sales contract; or
(II) the contract rate if the retail seller requires
the retail buyer to purchase credit life or credit accident and health
insurance.
(ii) Sales tax deferred transactions. On sales tax
deferred transactions using the scheduled installment earnings method,
the annualized daily rate is the contract rate.
(iii) Effective rate. The maximum annualized daily
rate cannot exceed the effective rate contained in Figure: 7 TAC §84.201(d)(2)(B)(iii)
for the equivalent monthly period and appropriate add-on rate per
$100 determined by the model year designated by the manufacturer of
the vehicle. The effective rates contained in Figure: 7 TAC §84.201(d)(2)(B)(iii)
are the current maximum annualized daily rate authorized by Texas
Finance Code, §348.104 or the alternative simple time price differential
rate authorized by Texas Finance Code, §348.105. The alternative
simple time price differential rate authorized by Texas Finance Code, §348.105
displayed as an example in Figure: 7 TAC §84.201(d)(2)(B)(iii)
is 18% per annum. If the alternative simple time price differential
rate is adjusted according to Texas Finance Code, Chapter 303 and
is greater than effective rate contained in Figure: 7 TAC §84.201(d)(2)(B)(iii),
the published rate will be highest effective rate.
Attached Graphic
(iv) Irregular payment contract effective rate. On
a retail installment sales contract that is an irregular payment contract,
the highest effective rate is determined by taking the closest monthly
effective rate as shown in Figure: 7 TAC §84.201(d)(2)(B)(iii)
assuming that the contract was payable in substantially equal successive
monthly installments beginning one month from the date of the contract.
(I) The closest monthly period is determined as follows:
(-a-) Count the number of days from the date of the
contract to the originally scheduled maturity date;
(-b-) Divide the results of item (-a-) of this subclause
by 365;
(-c-) Multiply the results of item (-b-) of this subclause
by 12.
(II) If the results of subclause (I) of this clause
are exactly .5333 or more between the two monthly periods, the closest
monthly period is rounded up to the next monthly period. For example,
if the closest monthly period is determined to be 14.5333 months,
the maximum annualized daily rate is the effective rate for 15 months.
(III) If the results of subclause (I) of this clause
are less than .5333 between the two monthly periods, the closest monthly
period is rounded down to the previous monthly period. For example,
if the closest monthly period is determined to be 14.50 months, the
maximum annualized daily rate is the effective rate for 14 months.
(C) Deferred sales tax. For usury purposes, the deferred
sales tax is allocated on a straight line basis. A straight line basis
is calculated by dividing the original gross deferred sales tax amount
by the original term of the contract. The allocation of the deferred
sales tax for the final payment must be adjusted for any rounding
differences. The payment amount disclosed on the retail installment
sales contract must include the straight line allocation of the deferred
sales tax per installment.
(D) Contract rate less than the maximum annualized
daily rate. If a retail seller consummates a retail installment sales
contract with a contract rate that is less than the maximum annualized
daily rate, the retail seller must compute the time price differential
charge at the disclosed contract rate.
(3) True daily earnings method. The true daily earnings
method can be used for both regular and irregular payment contracts.
(A) Maximum time price differential. The maximum time
price differential charge is computed by applying the applicable daily
rate to the unpaid principal balance subject to a finance charge,
as defined by §84.102(14) of this title. The computation of the
time price differential must comply with the U.S. Rule as defined
by §84.102(22) of this title. The earned time price differential
charge is computed as follows:
Cont'd... |
