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1997 SESSION

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HB 2446 Finance charges; prohibiting the use of Rule of 78.

Introduced by: Gladys B. Keating | all patrons    ...    notes | add to my profiles

SUMMARY:

Finance charges; prohibiting the use of the Rule of 78. Prohibits the use of the Rule of 78 as a method for determining the amount of unearned interest returned to a borrower when a loan is prepaid. Current law allows the use of the Rule of 78 for determining the amount of unearned interest to be rebated on loans with a maturity of less than 61 months. This bill would require that the lender select a method for determining the refund which is at least as favorable to the debtor as refunds based on the actuarial method. Use of the Rule of 78 is also prohibited when determining the amount refunded to insurance policyholders who terminate policies issued in connection with credit transactions.


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