| (i) multiply the unpaid principal balance subject to
a finance charge by the applicable daily rate; and
(ii) multiply the results of clause (i) of this subparagraph
by the number of days the actual unpaid principal balance subject
to a finance charge is outstanding.
(B) Maximum annualized daily rate.
(i) Sales tax advanced transactions. On sales tax advanced
transactions using the true daily 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 true daily 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.
(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.
(E) Application of payments.
(i) General requirements if no payment application
specified in contract. If the retail installment sales contract does
not prescribe the method for the application of the payment, the payment
should be applied in the following order:
(I) earned but unpaid time price differential charge;
and
(II) anything else owed under the contract.
(ii) Sales tax deferred transactions assigned to related
finance companies. If the retail installment sales transaction is
a sales tax deferred transaction in which the retail installment sales
contract does not prescribe an application of payments method and
the contract has been assigned by a dealer to its related finance
company as that term is defined by Texas Tax Code, Chapter 152, the
related finance company must apply the payment in the following order:
(I) amount of the straight line allocation of the deferred
sales tax, if the transaction is a sales tax deferred transaction;
(II) earned but unpaid time price differential charge;
and
(III) anything else owed under the contract.
(iii) Use of model provision sufficient. While the
retail installment contract is not required to use the model provision,
use of the model provision found in 7 TAC §84.808(21) (relating
to Model Clauses), or a variation of it as allowed under that section
or 7 TAC §84.809 (relating to Model Contract; Permissible Changes),
is deemed to sufficiently prescribe the method of application of payment.
|
| Source Note: The provisions of this §84.201 adopted to be effective November 6, 2008, 33 TexReg 8913; amended to be effective November 5, 2009, 34 TexReg 7605; amended to be effective May 5, 2016, 41 TexReg 3120; amended to be effective December 31, 2020, 45 TexReg 9416 |
