§969.20. Rebates upon prepayment; prepayment charges; return of lien documents upon payment in full of the balance due

A. Upon prepayment in full of a precomputed transaction, the extender of credit shall refund unearned precomputed loan finance charges or credit service charges, and such refund shall represent at least ninety percent as great a portion of the loan finance charge or credit service charge, after first deducting from such precomputed charge a prepayment charge of not more than twenty-five dollars, as the sum of the monthly time balances beginning one month after the month in which prepayment is made, bears to the sum of all the monthly time balances under the schedule of payments in the contract. This method of rebate upon prepayment is commonly referred to as the "Rule of 78's" or the "Sum of Digits" rebate method. If more than one-half of the term of the precomputed transaction has elapsed, the rebate shall be computed without deducting a prepayment charge. For the purposes of rebate upon prepayment, deferral charges are not required to be rebated. No rebate less than one dollar, or to the extent provided for by federal law, is required.

B. An extender of credit may charge the consumer a twenty-five dollar prepayment charge upon prepayment in full of a simple interest transaction. The extender of credit must include a contractual covenant in the consumer's contract under which the consumer agrees to pay such a prepayment charge.

C.(1) There is no requirement that prepaid finance charges be rebated upon prepayment in full of a simple interest transaction, provided that all of the following conditions are satisfied:

(a) The original amount financed or amount deferred was five thousand dollars or more.

(b) The original scheduled term of the transaction was twenty-four months or longer.

(c) Other than in connection with a credit transaction involving a manufactured home, prepaid finance charges assessed under the transaction did not exceed five percent of the original amount financed or amount deferred.

(2) Where any one or more of the conditions in Paragraph (1) of this Subsection are not satisfied, prepaid finance charges shall be subject to rebate upon prepayment in full of a simple interest transaction under the same method as provided in Subsection A of this Section.

D.(1) If the lender or holder of the retail installment contract receives from the consumer or the consumer's designee payment in full in an amount in accordance with the outstanding balance information, then the lender or holder of the retail installment contract shall accept the amount as payment in full, release the lender's or the retail installment contract holder's lien against the motor vehicle, and return the title or a lien satisfaction certification no later than the fourteenth day after the date upon which payment in full is received at the location designated by the lender or holder of the retail installment loan for such payments. If the lender or holder of the retail installment loan fails to return the title to the consumer or the consumer's designee within the specified time period, then the lender or holder of the retail installment contract shall provide sufficient funds to the consumer or the consumer's designee in order to obtain a duplicate title no later than fourteen days after payment in full is received at the location designated by the lender or holder of the retail installment contract for such payments.

(2) For the purposes of this Subsection, a payment in cash or certified funds shall be deemed to be received on the date that the lender or holder of the retail installment contract receives payment. All other forms of payment shall be deemed to be received on the date that the lender or the holder of the retail installment loan receives notice that the financial institution upon which payment is drawn has honored the payment.

Acts 1999, No. 794, §1, eff. July 2, 1999; Acts 2008, No. 236, §1.