Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The
"finance charge" for a commercial financing transaction is the sum of:
(1) For all commercial financing
transactions, all charges that would be included in the finance charge under 12
C.F.R. Part 1026.4 (1-1-21 Edition), which is incorporated herein by this
reference, if the transaction were a consumer credit transaction and the
financer were a creditor under federal law. This paragraph is intended to
require finance charges to include any charge that would be a finance charge
under 12 C.F.R. Part 1026.4 , regardless of whether the transaction in question
would be considered an "extension of credit" under federal law and regardless
of whether the financer would be considered a "creditor" under federal
law;
(2) In any accounts receivable
purchase transaction that is not a factoring transaction, the discount taken on
the face value of the accounts receivable;
(3) In a factoring transaction, the face
value on the invoice minus the amount paid directly to the recipient upon
assignment of the legally enforceable claim to the financer. For the purposes
of the calculation described in the preceding sentence, if the transaction
involves a reserve amount, the reserve amount shall also be subtracted from the
face value on the invoice only if the financer reasonably anticipates that it
will return all reserve amounts to the recipient once it has been paid for the
legally enforceable claim or claims assigned by the recipient or upon
termination of the contractual relationship between the financer and the
recipient, properly crediting payments made by account debtors and previous
collections by the financer from the recipient, all amounts held in reserve,
and payments by insurers on defaulted accounts. In determining what the
financer can reasonably anticipate, the financer shall consider past
performance of similar contracts (both those made to the recipient and other
similar recipients) and the policies and procedures of the financer;
and
(4) In any lease financing
transaction, the sum of lease payments (including any regular periodic payments
and irregular payments) and price of the purchase option that the lessee may
pay to acquire the leased goods at the end of the lease, minus the amount
financed.
(b) For
products where any part of the finance charge is based upon interest that
accrues on the outstanding principal balance owed by the recipient, the
interest charge adjusts over time, and it is not possible to calculate the
interest charges in advance for the entire term of the transaction because the
charge adjusts based upon a benchmark rate plus a margin, the provider shall
calculate the interest charges for periods of time when the interest charge
cannot be calculated in advance based upon the benchmark rate in effect at the
time of disclosure and the margin.
(c) For the purposes of the calculation
required by subdivision (a) of this section, a charge or amount that meets the
requirements of subdivision (a)(1) and subdivisions (a)(2), (a)(3), or (a)(4)
shall not be counted twice.
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.
