Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Disclosures for closed-end transactions
provided in accordance with section
22802 of the code, and open-end
credit plans described in section
900, subdivision (a)(5)(C), shall
comply with the following requirements unless the closed-end transaction meets
the definition of sales-based financing.
(1)
The provider shall present the disclosures in a table consisting of eight rows
and three columns.
(2) The first
row of the table shall include only the following information.
(A) In the first column: "Funding
Provided".
(B) In the second
column, the amount financed.
(C) In
the third column, the following in the order listed and in one paragraph:
(i) "This is how much funding [name of
financer] will provide."
(ii) If
the amount financed is greater than the recipient funds: "Due to deductions or
payments to others, the total funds that will be provided to you directly is
[recipient funds]. For more information on what amounts will be deducted,
please review the attached document "Itemization of Amount
Financed.""
(iii) If any portion of
the amount financed will be used to pay down or pay off other amounts owed by
the recipient that may change over time, and the amounts owed are known to the
provider, the provider shall also include a short explanation that the amount
paid directly to the recipient may change if the amount owed for the
recipient's other obligations changes.
(iv) If, as a condition of the financing, a
recipient's amounts owed to third parties must be paid down or paid off using
funds from the amount financed, and an amount owed is not known to the
provider, the provider shall also include a short explanation that the amount
paid directly to the recipient may change based upon the required disbursements
to satisfy other obligations.
(3) The second row of the table shall include
only the following information.
(A) In the
first column:
(i) If the contract provides for
a fixed interest rate or rates that are predetermined by the contract, or no
interest rate: "Annual Percentage Rate (APR)".
(ii) If the contract provides for an
adjustable interest rate or rates that are not predetermined by the contract:
"Estimated Annual Percentage Rate (APR)".
(B) In the second column, the annual
percentage rate calculated in accordance with section
940.
(C) In the third column:
(i) The following language, if the contract
provides for a single, fixed interest rate:
"APR is the cost of your financing expressed as a yearly
rate. APR includes the amount and timing of the funding you receive, interest
and fees you pay and the payments you make.
Your APR is not an interest rate. Your interest rate is
[interest rate]. Your APR may be higher than your interest rate because APR
incorporates interest costs and other finance charges."
(ii) The following language, if the contract
provides for a multiple pre-determined interest rates that change over time:
"APR is the cost of your financing expressed as a yearly
rate. APR includes the amount and timing of the funding you receive, interest
and fees you pay and the payments you make.
Your APR is not an interest rate. Your initial interest rate
is [initial interest rate]. Your APR may be higher than your interest rate
because APR incorporates interest costs and other finance
charges."
(iii) The
following language, if the contract provides for an adjustable interest rate or
rates that are not predetermined by the contract.
"APR is the cost of your financing expressed as a yearly
rate. APR includes the amount and timing of the funding you receive, interest
and fees you pay and the payments you make.
APR is not an interest rate. Your initial interest rate is
[initial interest rate]. Although your interest rate will adjust over time, for
the purposes of calculating this APR estimate, we have used the initial
interest rate for future periods where the interest rate is not preset by the
contract. Your APR may be higher than your interest rate because APR
incorporates interest costs and other finance charges."
(iv) The following language if no part of the
finance charge is based upon an interest rate:
"APR is the cost of your financing expressed as a yearly
rate. APR includes the amount and timing of the funding you receive, fees you
pay and the payments you make.
Your APR is not an interest rate. The cost of this financing
is based upon fees charged rather than interest that accrues over
time."
(4) The third row of the table shall include
only the following information.
(A) In the
first column:
(i) If the contract provides
for a fixed interest rate or rates that are predetermined by the contract, or
no part of the finance charge is based upon an interest rate: "Finance
Charge".
(ii) If the contract
provides for an adjustable interest rate or rates that are not predetermined by
the contract: "Estimated Finance Charge".
(B) In the second column, the total finance
charge, calculated in accordance with section
943.
(C) In the third column:
(i) "This is the dollar cost of your
financing."
(ii) If the contract
provides for an adjustable interest rate or rates that are not predetermined by
the contract: "The interest rate under your contract will adjust over time, so
your actual finance charge may vary."
(5) The fourth row of the table shall include
only the following information.
(A) In the
first column:
(i) If, assuming the recipient
makes minimum required payments under the contract, it is possible to calculate
with certainty the total payments the recipient will make during the contract's
term: "Total Payment Amount".
(ii)
If, assuming the recipient makes minimum required payments under the contract,
it is not possible to calculate with certainty the total payments the recipient
will make during the contract's term: "Estimated Total Payment
Amount".
(B) In the
second column, the total dollar amount of payments or total estimated dollar
amount of payments the recipient will make during the term of the contract if
the recipient makes minimum required payments.
(C) In the third column:
(i) If, assuming the recipient makes minimum
required payments under the contract, it is possible to calculate with
certainty the total dollar amount of payments the recipient will make during
the term of the contract: "This is the total dollar amount of payments you will
make during the term of the contract."
(ii) If, assuming the recipient makes minimum
required payments under the contract, it is not possible to calculate with
certainty the total dollar amount of payments the recipient will make during
the term of the contract: "This is our estimate of the total dollar amount of
payments you will make during the term of the
contract."
(6)
The fifth row of the table shall include only the following information:
(A) In the first column:
(i) If the periodic payments will not vary
over the term of the transaction or the periodic payments during the term of
the transaction will vary and it is possible to calculate the payment amounts
in advance: "Payment".
(ii) If the
periodic payment amounts will vary over the term of the transaction and it is
not possible to calculate the payment amounts in advance (e.g. due to an
adjustable interest rate using a benchmark rate and a margin): "Initial
Payment".
(B) If periodic
payments during the term of the transaction will not vary:
(i) In the second column, the amount of each
periodic payment followed by a forward slash (/) and the frequency of each
periodic payment (e.g., month, day, or other period) followed by the date and
amount of any irregular payments listed in chronological order.
(ii) In the third column, a short explanation
of the payment frequency and any irregular payments. The provider may also
include a short explanation describing when each periodic payment will become
due.
(C) If periodic
payments during the term of the transaction vary and it is possible to
calculate the payment amounts in advance, the second and third columns in the
fourth row shall be combined and the provider shall list the periodic payment
amounts and when each amount will become due followed by the date and amount of
any irregular payments in listed chronological order. For example:
Months 1-12: $600/month
Months 13-24: $1200/month
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
Or
Payments 1-23: $600/month
Payment 24: $2000.
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
(D) If periodic payments during the term of
the transaction vary and it is not possible to calculate all payment amounts in
advance:
(i) In the second column, the initial
periodic payment amount followed by a forward slash (/) and the frequency of
each periodic payment followed by the date, followed by the date and amount of
any irregular payments listed in chronological order.
(ii) In the third column: "This is your
initial periodic payment. Your periodic payment may adjust over
time."
(7) The
sixth row of the table shall include no information in the third column, and
the remaining columns shall include only the following information:
(A) In the first column: "Term".
(B) In the second column, the term of the
transaction.
(8) In the
first column, the seventh and eight rows shall be combined and shall include
only the following language: "Prepayment".
(9) In the seventh row, the second and third
columns shall be combined and include only:
(A) If, at any time during the term of the
transaction, prepayment of the outstanding balance due will require the
recipient to pay charges other than interest accrued since the recipient's last
payment, the following statement: "If you pay off the financing early, you will
still need to pay all or a portion of the finance charge, up to $[maximum
non-interest finance charge]."
(B)
In all other cases, "If you pay off the financing early, you will not need to
pay any portion of the finance charge other than unpaid interest accrued (if
applicable)."
(10) In the
eighth row, the second and third columns shall be combined and shall include
only:
(A) If, at any time during the term of
the transaction, prepayment of the outstanding balance due will require the
recipient to pay additional fees and charges not included in the finance
charge, the following statement: "If you pay off the financing early you must
also pay the following additional fees:" followed by the amounts and
descriptions of each additional fee and charge.
(B) In all other cases, the following
statement: "If you pay off the financing early you will not pay additional
fees."
(11) If the
contract provides for periodic payments that are not monthly, the provider
shall insert one additional row below the fourth row, and the additional row
shall include only the following information:
(A) In the first column: "Average Monthly
Cost".
(B) In the second column,
the average monthly cost that the recipient will pay over the term of the
transaction.
(C) In the third
column: "Although this financing does not have monthly payments, this is our
calculation of your average monthly cost for comparison
purposes."
(12) If the
contract provides for multiple payment options, then the provider shall insert
one additional row above the first row, and in that row, all three columns
shall be combined, resulting in a single cell. In that cell, the provider shall
include the following: "This financing has multiple payment options. This
disclosure assumes you will make the minimum payments permitted under the
contract."
1. New section
filed 6-9-2022; operative 12-9-2022 pursuant to Government Code section
11343.4(b)(2)
(Register 2022, No. 23). Transmission deadline specified in Government Code
section
11346.4(b)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified
in Government Code section
11349.3(a)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order
N-71-20.
Note: Authority cited: Sections
321 and
22804,
Financial Code. Reference: Sections
22800,
22802 and
22804,
Financial Code.
