Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Disclosures for
commercial open-end credit plans provided in accordance with section
22802 of the code, except open-end
credit plans described in section
900, subdivision (a)(5)(C), shall
comply with the following requirements.
(1)
The provider shall present the disclosures in a table consisting of ten rows
and three columns.
(2) In the first
row, the first, second and third columns shall be combined, and the resulting
cell shall have only the following language, in italics:
(A) If the contract allows only for a single
payment option: "The calculations below are based on an initial draw of your
full Approved Credit Limit of [approved credit limit] and assume that you will
pay off the draw entirely according to the agreed payment schedule, that you
miss no payments, and that you do not redraw on this line. Actual costs may
differ substantially."
(B) If the
contract allows for multiple payment options: "The calculations below are based
on an initial draw of your full Approved Credit Limit of [approved credit
limit] and assume that you will choose to make minimum payments, that you miss
no payments, and that you do not re-draw on this line. Actual costs may differ
substantially."
(C) If the amount
borrowed is payable on demand, the provider shall include a short explanation
that amounts borrowed are payable on demand and that the estimate assumes a
term of one year.
(D) If an
alternate maturity date is stated in the legal obligation between the parties,
then the provider shall include a short explanation that the disclosure is
based upon that maturity date.
(3) The second 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,
in the order listed and in one paragraph:
(i)
"This is the maximum amount of funding [name of financer] may
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 if you request
the maximum amount 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.
(4) The third row of the table shall include
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: "Annual
Percentage Rate (APR)".
(ii) If the
contract provides for an adjustable interest rate and it is not possible to
calculate the interest rates throughout the term of the transaction in advance:
"Initial Annual Percentage Rate (APR)".
(B) In the second column, the provider's
calculation of the annual percentage rate calculated in accordance with section
940.
(C) In the third column:
(i) 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.
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) If the contract provides for 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) If the
contract provides for an adjustable interest rate and it is not possible to
calculate the interest rates throughout the term of the transaction in advance:
"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) 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.
APR is not an interest rate. The cost of this financing is
based upon fees charged rather than interest that accrues over
time."
(5) The fourth row of the table shall include
only the following information:
(A) In the
first column: "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 our financing
based upon the assumptions described at the top of this disclosure."
(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."
(6) The fifth row of the table shall include
only the following information:
(A) In the
first column: "Estimated Total Payments".
(B) In the second column, the total estimated
payments the recipient will make during the term of the contract if the
recipient makes minimum required payments.
(C) In the third column: "This is the total
dollar amount of payments you will make during the term of the contract based
upon the assumptions described at the top of this
disclosure."
(7) The
sixth row of the table shall include only the following information:
(A) In the first column: "Estimated
Payment".
(B) If periodic payments
during the term of the transaction will not vary over the term of the
transaction:
(i) In the second column, the
amount of the periodic payment followed by a forward slash (/) and the
frequency of each periodic payment followed by the date and amount of any
irregular payments listed in chronological order.
(ii) In the third column, a short explanation
of when each 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 fifth row shall be combined and
the provider shall list the periodic payment and when each amount will become
due followed by the date and amount of any irregular payments listed
chronological order and any assumptions made when calculating the payment
amounts. 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.
(D) If periodic payments during the term of
the transaction vary and it is not possible to calculate all payment amounts in
advance because the transaction has an adjustable interest rate that cannot be
calculated in advance:
(i) In the second
column, a periodic payment amount calculated using the initial interest rate
followed by the date and amount of any reasonably anticipated irregular
payments listed in chronological order.
(ii) In the third column, a short explanation
that the periodic payment amount disclosed is based upon the initial interest
rate, and that the actual rate may change over time. The provider may also
include a short explanation describing when the payment will adjust and how it
will be calculated.
(E)
If periodic payments of principal during the term of the transaction do not
vary but periodic payments of interest during the term of the transaction vary,
and it is not possible to calculate all interest payment amounts in advance
because the transaction has an adjustable interest rate that cannot be
calculated in advance:
(i) In the second
column, the phrase "Initial Interest Payment:" followed by an interest payment
amount calculated using the initial interest rate, followed by a forward slash
(/) and the frequency of each periodic interest payment.
(ii) In the second column, beneath the
disclosure required by subdivision (a)(7)(E)(i), the phrase "Principal Payment
Amount:" followed by the amount of each periodic principal payment, followed by
a forward slash (/) and the frequency of each periodic principal
payment.
(iii) In the third column,
a short explanation that the Initial Interest Payment Amount disclosed is based
upon the initial interest rate, and that the actual rate may change over
time.
(iv) In the third column,
beneath the statement explaining the Initial Interest Payment Amount and at the
same height as the disclosure required under subdivision (a)(7)(E)(ii), a short
explanation of the principal payment amount and
frequency.
(8)
The seventh row of the table shall include only the following information:
(A) In the first column: "Draw
Period".
(B) In the second column,
the draw period for the transaction.
(C) In the third column, a short explanation
of the draw period for the transaction.
(9) The eighth 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.
(10) In the first column, the ninth and tenth
rows shall be combined and shall include only the following language:
"Prepayment".
(11) In the ninth
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 finance charges other than interest accrued since the
recipient's last payment, the following statement: "If you pay off the
financing early you will need pay all or 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)."
(12) In the tenth 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 the additional fees and charges.
(B) In all other cases, the following
statement: "If you pay off the financing early you will not pay additional
fees."
(13) If the
contract provides for periodic payments that are not monthly, the provider
shall insert one additional row below the fifth 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."
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,
22803 and
22804,
Financial Code.
