(a) Interest may not be paid, deducted, or received in advance. Except for open-end loans made under AS 06.20.285, interest shall be computed and paid only on unpaid principal balances and may not be compounded; however, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, the principal amount payable under the loan contract may include any unpaid charges on the prior loan that have accrued within 60 days before the making of the loan contract. The maximum interest permitted on loans made under this chapter shall be computed on the basis of the number of days actually elapsed. For the purpose of these computations a month is any period of 30 consecutive days.

(b) A licensee may compute interest for a loan as provided in this chapter on an interest-bearing or actuarial basis either at the rates stated in AS 06.20.230 or at the single annual percentage rate that would earn the same finance charge as the rates stated in AS 06.20.230 when the debt is paid according to the agreed terms and the calculations made according to the actuarial method.

(c) Except for open-end loans under AS 06.20.285, a licensee may not enter into a contract for a loan that provides for a scheduled repayment of principal over more than the maximum terms set out below opposite the respective size of loans.

Principal amount of loanMaximum term

up to $1,000 ....................................................24 and 1/2 months

Over $1,000 to $2,500 ...........................................48 and 1/2 months

Over $2,500 to $5,000 ...........................................60 and 1/2 months

Over $5,000 to $25,000 ................................as agreed to by the parties

(d) Loan contracts must provide for substantially equal payments, and the payments must be due at least once a month, with the first payment beginning not later than 45 days from the date the loan is made.

(e) If the irregular payment is confirmed in writing by the borrower, and the method of repayment is consistent with the maximum term and annual interest rate provided in this chapter, and if a borrower demonstrates sufficient seasonal or extraordinary income to support repayment of a loan, the loan contract may provide for irregular payments and first payment extensions greater than 45 days from the date the loan is made.